Celsius Network Goes Bankrupt Amid Crypto Pyramid Scheme Allegations
Celsius Network, a major crypto finance and lending company, went bankrupt under the signs of a pyramid scheme. The shockwave of the crisis, which includes the arrest of its chief financial officer, Yaron Shalem by Israeli police – accused of money laundering and fraud – has hit the market hard.
As bitcoin falls below $24,000 in a new 18-month low, Celsius Network was the first to announce the suspension of withdrawals, trades and transfers between accounts in its crypto client operations.
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The company managed the equivalent of $20 billion in crypto-assets and offered an average of 12% interest per year to its users for depositing funds. Financial agencies in various US states, including Texas and New York, had sent warnings to the firm suspecting it was a pyramid scheme.
Celsius Network made the announcement shortly after Binance announced a “temporary” freeze on bitcoin withdrawals. Then, users of Bitfinex, another trading platform, reported problems withdrawing funds.
Binance CEO and Founder Changpeng Zhao initially announced on Twitter that he was “temporarily suspending bitcoin due to a stalled transaction resulting in a backlog of transactions.” It should be fixed in about 30 minutes.”
Twenty minutes later, Zhao commented, “This will probably take a little longer to resolve than my initial estimate. More updates will be released soon. Thank you for your patience and understanding.”
Celsius Network’s explanation for suspending all withdrawals, trades and transfers was “extreme market conditions”, which caused bitcoin to crash again. The world’s largest cryptocurrency lost more than 13% and marked its worst fall since December 2020.
“We are making this decision to put Celsius in a better position to meet its pension obligations over time,” the platform said in a statement.
“We are taking this necessary step for the benefit of our entire community to stabilize liquidity and operations while taking steps to preserve and protect assets,” he added, noting that customers will continue to accumulate corresponding rewards during suspension.