Was Celsius just a Ponzi after all?

by · November 4, 2022

Crypto lender Celsius was one of the biggest victims of the bear market. After halting withdrawals for several months due to “extreme market conditions,” the distressed lender officially filed for Chapter 11 bankruptcy on July 13. Now, the federal judge overseeing the bankruptcy proceedings has ordered the auditor to determine whether the company operated as a Ponzi scheme. arrangement. Disgruntled Celsius customers have made a strong case that the company’s business practices met the legal definition of a Ponzi. After all, it didn’t take long for Celsius’ business model to crumble under volatility. This is a matter we should all pay close attention to.

In this week’s Crypto Biz, we revisit the Celsius debacle. We also explore Binance’s investment in Elon Musk’s Twitter deal and MicroStrategy’s renewed commitment to Bitcoin.

Judge orders investigation into whether Celsius was a Ponzi

In finance, a Ponzi scheme is a fraudulent investment practice in which returns are generated and paid out to existing investors by using money from later investors. Allegations of Ponzi have now been leveled at Celsius by its former clients, who say the firm used the assets of new users to pay returns and facilitate withdrawals by existing users. These claims are being taken seriously by federal judge Martin Glenn, who ordered the case manager and the Celsius creditors’ committee to investigate the matter closely. Glenn was quoted as saying he was “shocked” when he saw redactions made by Celsius related to an Oct. 11 motion outlining employee bonuses. This can become explosive.

Twitter monetization and free speech fueled Binance’s $500 million grant – CZ

Crypto exchange Binance was one of several firms that helped finance Elon Musk’s $44 billion acquisition of Twitter. Binance dished out $500 million to help fund the initiative, with CEO Changpeng “CZ” Zhao citing Twitter’s revenue potential and eventual transition to Web3 as the main reasons behind the investment. Of course, CZ expects to be paid back one day — even though Twitter has only occasionally turned a profit since it went public in 2013. I wouldn’t hold my breath, CZ.

MicroStrategy CEO reiterates ‘long-term’ Bitcoin play in Q3 earnings

Business intelligence firm MicroStrategy has no plans to relax its massive exposure to Bitcoin and will continue to invest in the digital asset for the long term. This commitment came not from Michael Saylor, who stepped down as CEO in August to focus on Bitcoin (BTC) evangelism, but from the company’s new head Phong Le. “We have not sold any Bitcoin to date,” Le said during MicroStrategy’s third-quarter earnings call. “To reiterate our strategy, we seek to acquire and hold Bitcoin for the long term. And we currently do not plan to engage in the sale of Bitcoin.” MicroStrategy reported a net loss of $27.1 million for the quarter.

Moneygram to enable users to buy, sell and hold cryptocurrency via mobile app

Fresh news on the adoption front: Digital payments company MoneyGram has announced that almost all US customers can buy, sell and hold cryptocurrencies through its mobile app. The company will initially support Bitcoin, Ether (ETH) and Litecoin (LTC) transactions, with plans to add more cryptoassets in 2023. MoneyGram’s global audience is over 150 million people. If crypto adoption takes off in the US, we could see similar support being rolled out around the world. However, it will depend on the regulations, the company said.

Before You Go: Why Did Dogecoin Pump This Week?

The cryptocurrency market surged to the end of October, with popular memecoin Dogecoin (DOGE) surging 150% on the back of Elon Musk’s purchase of Twitter. Are we still in a bear market or has the tide turned? In this week’s market report, I sat down with Marcel Pechman to discuss how Musk’s Twitter purchase could affect crypto and whether we are nearing a final bottom for this cycle. You can watch the full replay below (spoiler alert: I’m not very optimistic):

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