Investigator: Celsius’ accounting and operational controls were ‘inadequate’

In the bankruptcy case involving crypto lender Celsius, the independent auditor claims the company did not establish “adequate” accounting and operational controls in its handling of client cash. These claims are based on the company’s failure to establish “adequate” accounting and operating controls. The investigator made these allegations in his report.

In an initial report released on November 19 by the court that tasked examiner Shoba Pillay with looking into the bitcoin lending site, examiner Shoba Pillay raised several critical questions regarding the defunct site.

One of the most shocking admissions in Pillay’s report was the fact that Celsius’ Custody program was initiated “without proper accounting and operational controls or technological infrastructure.” This was one of the most important findings made in the investigation. Because of this, the company was able to compensate for the shortfall in its Custody wallet with money from other assets.

When the Custody program was launched on April 15, users of the Celsius platform were given the ability to transfer coins to and from each other, exchange coins, and use coins as collateral for loans.

Because the customer’s wallets were messed up, it is now difficult to determine what assets belonged to the customer at the time the consumer’s bankruptcy was filed. This is because the wallets got mixed up.

The preliminary analysis has also shed light on what ultimately pushed the lending platform to suspend withdrawals on 12 June, and the reasons for the decision are described in the paper. This decision was made due to the findings of the investigation.

According to Pillay, the turning point was on June 11, when the depository wallets of a number of different customers ran out of cash.

By June 24, that number had dropped another 24%, bringing the total amount of insufficient funding down to $50.5 million.

Celsius continued to struggle financially during the month of May, and one of the key factors contributing to this was the collapse of the Terra environment.

In addition, Celsius revealed on November 20 that the next trial date is scheduled for December 5. At this session, the company plans to continue discussions on a number of topics, including custody and advance accounts, which will be discussed further.