Former employees say issues plagued the crypto company Celsius years ahead of bankruptcy
Problems at Celsius appear to have been simmering for years before the crypto lender filed for bankruptcy.
Problems at Celsius appear to have been simmering for years before the crypto lender filed for bankruptcy.
The crypto company saw a range of internal missteps leading up to its recent turmoil, according to former employees and internal documents CNBC reviewed. Multiple employees painted a picture of risk-taking, disorganization and alleged market manipulation.
“The biggest issue was a failure of risk management,” Timothy Cradle, Celsius’ former director of financial crimes compliance, told CNBC in an interview. “I think Celsius had a good idea, they were providing a service that people really needed, but they weren’t managing risk very well.”
The Hoboken, New Jersey-based company made headlines a month ago after it froze customer accounts, blaming “extreme market conditions.” It had attracted 1.7 million customers and $11.8 billion in deposits as of June. Celsius customers have told CNBC they were drawn in by a 17% yield the company was offering on crypto deposits.
Behind the scenes, Celsius would lend that money out to hedge funds and others willing to pay an even higher yield. It would also invest in other high-risk cryptocurrency projects, according to internal documents. Celsius would later split those profits with the customer. The model came crashing down along with the price of cryptocurrencies, which caused multiple companies to freeze assets and at least three to file for bankruptcy.
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