The court-appointed examiner shows Celsius was bankrupt from the start

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According to the assessment of a court-appointed examiner for its bankruptcy proceedings, the defunct cryptocurrency lending platform Celsius Network has been defrauding consumers from its founding as a public corporation in the United States, which it reportedly used to circumvent British legislation.

In fact, Celsius U.S. has been insolvent from its formation, according to the U.S. examiner’s solvency report, which Frances Coppola, a lecturer and writer on economics, finance, and monetary policy, tweeted on Twitter on February 1.

In addition, according to the article, Celsius U.S. was established in August 2021, after the U.K.’s Financial Conduct Authority (FCA) refused Celsius Network U.K. a license and ordered it to discontinue selling to retail clients in the nation.

The examiner also called attention to the intercompany accounting between the two businesses, which Coppola described as “complicated to say the least” and “includes odd ‘loans’ and equity transfers akin to the Celsius-AMV (Equities First) structure” that she had previously described.

According to the economist, Celsius U.S. was created to circumvent U.K. regulation because internal accounting never differentiated between the two entities, instead viewing them on a consolidated basis. She added that she did not believe “they ever had the slightest intention of creating a standalone US entity.”

According to the chart Coppola provided from the examiner’s report, “major portions of Celsius’s company, including its Treasury (and all of its retained CEL coins), its mining operation, and GK8, remained with the U.K. firm,” she emphasized.

In addition, Celsius’s U.K. branch has not filed any accounts since December 2020 on the website of Firms House, the executive agency sponsored by the Department of Business, Energy, and Industrial Strategy that registers and makes public information on U.K. companies.

Coppola found that Celsius Network U.K.’s accounts were severely delayed, as shown by the fact that the company’s 2021 full-year accounts were not filed by December 31, 2022, as required by Companies House.

In the meantime, the crypto community accused Celsius of being a scam after it unveiled a plan to exit bankruptcy by rebranding itself as a publicly traded recovery corporation and giving creditors with locked assets exceeding a certain threshold an Asset Share Token (AST) reflecting the value of their assets.

Notably, in September 2022, Finbold reported that regulators accused Celsius’s company executives of misleading investors prior to the high-profile collapse and engaging in questionable transactions, such as the wife of former Celsius CEO Alex Manshinsky, who reportedly cashed out $2 million in crypto prior to the bankruptcy announcement.

Also Read: Charlie Munger condemns Bitcoin as ‘gambling’ and seeks to outlaw it in the United States

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