Celsius crypto collapse debtors make personal pleas for help

Over the past few weeks, the tech and cryptocurrency industries have watched the demise of Celsius, a high-profile crypto lender that filed for bankruptcy in mid-July. The crash followed a steep, inflation-driven fall in crypto prices, which exposed Celsius’ strategy of borrowing funds and making risky bets that depended on crypto values ​​continuing to climb.

Celsius’ debtors include institutional entities in the crypto space, but the vast majority of its 1.7 million users are retail investors who bet on huge returns promised by the company’s management. Although it is certainly an element of caveat emptor to its losses, many sincerely believed Celsius CEO Alex Mashinsky as he repeatedly asserted the company’s underlying strength and promised that the private company had enough reserves to meet its obligations.

More than 100 of those regular investors have now written to a New York federal judge overseeing Celsius’ bankruptcy proceedings. Their powerful letter provides a window into the collateral damage caused by reckless entrepreneurs in a largely unregulated market. They describe the pain, shame and heartache of believing Celsius’ false optimism. Many take responsibility for their faulty decisions, although virtually everyone seethes with anger at the lender’s management.

A selection of their letters follows:

Thomas Bull, from Australia, who “had 95% of my life in Celsius”: “I have suicidal thoughts and the only reason I hadn’t already taken my life was the burden that would leave my family. And I’ve lost 15% of my body weight in 6 weeks due to the stress of suddenly losing everything I’ve spent my life building up. Worst of all, my mother shared my home with me, so if I default on the home, she will be homeless at age 60 with no other savings. Her rock bottom to a place with no way out will be on my hands and I just don’t see a way I can recover.”

Dalena, surname and location not given: “Unfortunately, I have all my savings on the Celsius platform. My family trusted me to store Bitcoin in my Celsius account as well. However, we did not expect to be blindsided. This was a lot of money that we were going to use as leverage for a better life – not having to live paycheck to paycheck, not having to worry about rent arrears, being able to pay off our debt and school fees. It may not seem like much to most, but two years of our savings and investments have been robbed from us. For a low/middle class family, this whole situation is very frightening and extremely stressful.”

Merilou Athens-Barnekow, who had about $50,000 tied to Celsius: “I’m a small depositor — an 84-year-old widow on Social Security. The deposit was my life savings to pay for home care when I am no longer able to care for myself. I don’t have many years to wait for my savings to be returned. I made this decision after I saw the terrible care my husband received in a rehab hospital that was also a nursing home.”

Gregory, surname and location not given: “I am 71 years old, retired and have money in the low six figures tied up in Celsius. As I am retired, I will never be able to replace these funds. I don’t know if I’ll ever get any of my deposits back, but I’m lucky in that regard. I don’t want to starve and still want a place to live. The money, stupidly, was for my heirs. I can’t bring myself to tell them I’ve lost their money, even though they didn’t know it was placed in Celsius. In the end, I only have myself to blame.”

It is unrealistic to expect policymakers to root out all the hucksters and hacks in the still-infant crypto and decentralized finance areas. But as members of Congress and federal bureaucrats weigh additional guardrails — another regulatory proposal came Wednesday — the voices of Celsius’ regular debtors should be ringing in their ears.

The Celsius victims’ losses may not have been in the billions, but they might as well have been for them.

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NEW

A cloudy future. Electric car manufacturer Sure on Thursday cut its 2022 auto production forecast for the second time this year, citing supply chain and logistics issues that continue to plague the EV upstart. Clear officials said they now expect to produce 6,000 to 7,000 of the company’s luxury sedans in 2022, down from a target of 20,000 vehicles set earlier this year. Lucid shares fell 10% mid-day Thursday and are now down 55% year-to-date.

A power lunch game. The speaker of the house Nancy Pelosi ate on Wednesday with the two senior managers of Taiwan Semiconductor Manufacturing Company during her controversial 19-hour visit to the Asian island, Washington Post reported. Pelosi used the meeting to reinforce the importance of TSMC, which produces about 90% of the world’s most advanced chips, and tout the benefits of $52 billion in federal subsidies to flow to the semiconductor industry. President of Taiwan Tsai Ing-wen said the two sides “exchanged views on the deepening of Taiwan-US cooperation in various fields.”

Closes the shop. Facebook plans to end its livestream video shopping platform in October, the latest retreat by a tech company away from the feature, TechCrunch reported Wednesday. The Meta device encouraged creators and online sellers to move to sister site Instagram, which still has a live shopping platform, or Facebook’s short-form video feature known as Reels. The decision comes a month later Financial Times reported that TikTok planned to scale back its live e-commerce ambitions in the US and Europe due to overwhelming audience response.

Pointing with the finger. Solana blockchain developers believe a software problem with the closed-source wallet Slope is responsible for an ongoing hack hitting thousands of cryptocurrency holders, CoinDesk reported on Wednesday. Thieves have drained several million dollars from roughly 9,000 wallets linked to the Solana ecosystem, although the nonprofit behind the Solana network says it suspects the problem lies with hot wallet providers. About 25 million wallets exist on the Solana blockchain.

SOMETHING TO THINK ABOUT

Still in the game? Michael Saylor, perhaps the biggest Bitcoin bull of them all, has wandered off to pasture as CEO of his analytics and software company, Micro strategy. But like Fortune‘s Shawn Tully reported Wednesday that the outspoken entrepreneur has not soured on his signature crypto investment, which includes betting his entire company’s future on the growth of Bitcoin’s value. With Saylor continuing as MicroStrategy’s executive chairman, pledging to focus on “our Bitcoin acquisition strategy and related Bitcoin advocacy initiatives,” company watchers are wondering if his resignation truly signals a shift at the company he co-founded more than three decades ago.

From article:

In a surreal twist, even as the company announced (Wednesday) a giant $918 million writedown on its Bitcoin holdings, MicroStrategy’s stock soared the day after the news hit, rising 15% to $321 and gaining over $400 million in market capitalization.

The jump expands on the mystical mythology of Michael Saylor. Did Wall Street cheer because the bedrock software business will do far better when Saylor, distracted by Bitcoin, isn’t running things on a day-to-day basis? Or does having him as a full-time crypto evangelist actually lift Bitcoin’s prospects and thereby brighten MicroStrategy’s future?

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BEFORE YOU LEAVE

A virtual miracle. Modern medicine and virtual reality recently joined forces for an incredible achievement in Brazil. Washington Post reported on Wednesday remarkable effort this summer to separate cranially conjoined 3-year-old twins, Arthur and Bernardo Lima, who became the oldest known pair to undergo the complex procedure. The Rio de Janeiro-based medical team used VR technology to practice for the grueling series of seven operations, allowing them to virtually train alongside renowned experts in the UK. Doctors said Arthur and Bernardo are on the mend, although they will remain in the hospital for about six months.