Bankruptcy lender Celsius wants to rehire former manager for $93,000 a month

Cryptocurrency lender Celsius, which filed for bankruptcy last month, is now asking to pay a former executive handsomely while it goes through legal proceedings.

Celsius, which once proclaimed itself “better than a bank,” filed for bankruptcy in July with about $167 million in cash on hand and $4.3 billion in assets, while owing about $4.7 billion to users, according to bankruptcy filings. The company froze users’ accounts on June 13 as cryptocurrencies plunged in value and many investors tried to withdraw their money.

Celsius is now seeking a judge’s permission to pay its former chief financial officer $93,000 per month while the bankruptcy filing works its way through court. The company on July 25 asked New York’s Southern District Bankruptcy Court to allow it to hire former CFO Rod Bolger as a consultant, citing the “need for stability” and his financial expertise in its request to keep him on board.

“His institutional knowledge and experience regarding the unique characteristics of cryptocurrency is invaluable,” Celsius said in the filing.

However, Celsius customers are fuming over what many call a cash grab by unreliable managers. More than 100 investors have written directly to Judge Martin Glenn, who is overseeing the case – some asking for the lost funds to be returned and others accusing Celsius executives of criminal behaviour.

“[T]the lives of thousands of individuals have been destroyed by virtue of the actions of [Celsius],” wrote attorneys for investor Keith Suckno. “Before the debtors cavalierly pay an insider nearly $100,000 per month, more information should be required from the debtors, including exactly what services will be required of Mr. Bolger, why those services cannot be performed by other employees.”

“This company is asking for more per month than the average citizen earns in a year!” wrote Celsius investor Mario Foti. Foti, who says he was a disabled war veteran from Afghanistan, said he turned to Celsius as a means of raising money because he was having trouble finding work.

“I’ve been saving for years to accumulate the sum I had in Celsius,” he said. “This is gross negligence and a complete lack of respect for the people who have lost their livelihoods because of this. I pray that the justice system does its job and does not allow the rich to continue to steal from the poor.”

It is not unusual for a bankrupt company to offer a lucrative salary to an existing or former executive to help oversee its court-supervised reorganization. But such expenses can leave less money left to distribute to creditors.

A representative for Celsius did not immediately respond to a request for comment.

“State of Fear”

Meanwhile, many Celsius investors said they lost significant savings on the platform.

“I have been in a state of fear, depression, anxiety, hopelessness at the prospect of losing so much of my savings,” wrote Lindsey Derence, a 72-year-old woman who said she lost money investing in the company.

After years of accumulating cryptocurrency, Derence said she hoped to build up her holdings until she could use the money to pay off her mortgage. “I was a depositor who thought I was depositing my cryptos in a safe digital bank,” she wrote. “I am asking you to stand by us and recover our hijacked deposits from this criminal.”

Samuel Degegori wrote about losing $15,000, or the bulk of his savings. “I am ashamed, humiliated and frankly, disgusted, that I put all my trust in a company that has clearly engaged in almost fraudulent activity. I will spend years trying to make back the money I lost,” he wrote.