By Evan Spicer
Director of Cryptocurrency Investigations
MyChargeBack
In a decisive victory for Celsius scam victims, a bankruptcy judge ordered the failed crypto lender to reimburse holders of custody accounts to the tune of $50 million, as reported by Bloomberg. This move provides hope for customers who are hoping for celsius recovery, but there is still a long way to go before all victims of the Celsius scam retrieve their funds.
Celsius, a crypto lender that filed Chapter 11 bankruptcy in July, is an alleged crypto scam, according to a lawsuit filed by investment manager Jason Stone.The Celsius scam was alleged to have inflated the value of its CEL token and to have operated a Ponzi scheme. Instead of simply lending money, Celsius urged customers to open accounts and promised returns of up to 18% in some cases.
When Celsius collapsed, it sought protection under Chapter 11 and claimed that it needed funds to keep operating and pay bills. It seemed that crypto recovery was unlikely for Celsius’ customers, who lost a total of $4.4 billion.
A $50 Million Celsius Recovery Victory
However, a U.S.bankruptcy judge, Martin Glenn, handed a modest but hopeful victory on behalf of owners of certain custody accounts on Celsius. The former crypto lender was ordered to return $50 million to certain owners of custody accounts – which means that the crypto coins still belong entirely to the owners and were not commingled with other Celsius funds.
This decision is just one step in an ongoing process to decide how much money Celsius needs to reorganize and operate and how the failed lender will reimburse holders of regular accounts. The number of custody account holders is 58,300, with a total of $210 million. Of these customers, 15,680 had Pure Custody Accounts and these account holders have been provided with Celsius recoveries.
Although the vast majority of Celsius customers won’t benefit from this decision, they still can hope and work for fraud recovery from the Celsius scam. The process may be a long one, but with persistence, crypto recovery is possible, especially in the case of Celsius where there is a U.S. bankruptcy judge presiding.
What Are the Chances of Celsius Recovery?
The losses from the Celsius scam have been staggering – over $4 billion. However, Celsius scam victims have one advantage – it was a high profile case that is being dealt with in the courts with a federal bankruptcy judge on the case.
This is no guarantee of Celsius recovery, but since there is so much transparency and the authorities are involved in the case, fraud recovery may be more likely than with crypto scams that run off and disappear without a trace. Even in the latter cases, fraud recovery is possible, but the situation is easier to deal with when the authorities are already investigating the suspected crypto scam.
Was Celsius a Crypto Scam?
Celsius was a crypto lender that claimed to have been regulated by the U.S. Securities and Exchange Commission (SEC). It’s always important to check for a license before signing up for any kind of financial service, but that doesn’t mean that a license creates immunity to crypto scams. However, regulation means that there will be oversight if the financial service turns out to be a crypto scam – and the chances of fraud recovery are usually better than for unregulated companies.
Celsius may have had a license, but that doesn’t mean it wasn’t a crypto scam. There is currently a lawsuit against the alleged Celsius scam that it overvalued its own coin, gave customers false guarantees of returns and engaged in a Ponzi scheme.
License or no license – it seems clear that Celsius was a crypto scam.
What Were Some Red Flags that Gave the Celsius Scam Away?
What about the people who signed up and opened an account with the Celsius scam? How could they have known they were getting into trouble?
Although it’s a fact that not all crypto scams leave telltale signs, there were some red flags with the Celsius scam. First, Celsius boasted that customers could get returns of up to 18%. This is a highly inflated rate or return and is often a sign that something is amiss.
Second, Celsius engaged in a high-risk hedging strategy without sufficient market capitalization to cover losses. Researching Celsius market capitalization would have made it obvious that the Celsius scam wouldn’t have been able to cover customer losses. Many crypto traders don’t dig too deeply and do due diligence and, therefore, they are vulnerable to crypto scams.
Third, the Celsius scam offered a higher rate of return to customers who agreed to be paid only through the crypto lender’s own token – CEL. The purpose of this was to artificially inflate the value of CEL. Customers were being paid in a token that had no underlying value, and when the bubble collapsed, the Celsius scam could claim they couldn’t repay their customers.
That is one reason a lawsuit alleging Celsius is a crypto scam arose at the same time that Celsius filed for Chapter 11. There was a concern that the crypto lender was attempting to seek refuge from its creditors and customers by filing for Chapter 11. However, there is some indication that the U.S. bankruptcy judge is not allowing the Celsius scam to avoid clients with fraud recovery claims.
How to Improve Your Chances of Celsius Recovery?
It may take some time for Celsius recovery, but that doesn’t mean that you should sit back and wait. Be proactive and get your claim ready. This means seeking the expertise of MyChargeBack professionals who will launch a crypto investigation and create a report that will bolster your claim. We will fight for you through the Celsius recovery process and will improve your chances of success.
Are You Seeking Celsius Recovery? Talk to MyChargeBack Professionals Today
If you have lost money to financial fraud, talk to the MyChargeBack team. Our investigations will provide evidence to bolster your claim. Our crypto investigation reports are essential for tracking down your funds on the blockchain and getting your started on the road to fund recovery.
