Celsius is predicted to keep the customers last in priority at the time of repayment

Celsius creating a havoc in the market for the investors

Celsius, a crypto lending firm, as a strategy to lure more investors to integrate with the firm, went on to depict itself as an alternative to traditional banks, where in the investors would get higher interest rates on their deposits in comparison to the bank. As any economic investor’s natural instinct is to earn more returns on their deposits, many investors from the cryptocurrency industry invested their cryptocurrency deposits with the crypto lending company. According to the reports, Celsius lured the customers into its trap by stating that returns on deposits would go as high as 20% and a 8.8% interest would accrue to stable coins like Tether’s USDC.

However, as no one expected or predicted, the market crash occurred in May, leaving the crypto lending company in huge despair. As the time was passing in the market, the situation of the company got worse. First the company went on to freeze the accounts of the investors, not letting them to withdraw or trade their deposits and then ultimately filed a chapter 11 for Bankruptcy, creating a havoc for the investors.

Chapter 11 Bankruptcy

Chapter 11 Bankruptcy, is one of the chapters present among the various chapters of Bankruptcy. This chapter prioritizes repayments to secured creditors first and then to unsecured creditors and finally to equity shareholders. According to the reports, the terms and services of Celsius, would categorically put the users and investors in the unsecured creditors category, which would mean that they are not the first priority in case of repayment of the debts. This also means that the crypto lending company is assumed to keep the customers last in line in terms of repayment.

Another worry for the investors was caused by the statement from the CEO, who acknowledged that there is a big hole in the balance sheet. As of 13^th July, the difference between total assets and total liabilities was more than $1 Billion.

Writer’s Insights:

According to me, the tricks that Celsius played on the investors were unfair and biased to some extent. Only to increase their business, the company lured customers without having a proper reserve resource to repay the customers at the time of a market debacle like the market crash. The current situation of the customers is pitiful to say the least. Stress of all kinds, loss of financial asset have all surrounded the investors to inject more misery and loss.