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Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers
- a2tech 4y agogasp I'm shocked, absolutely SHOCKED, that people involved in crypto would be scam artists.
- dvngnt_ 4y agowould be or could be?
- MichaelCollins 4y agoWould be; anybody could be a scam artist.
- jqpabc123 4y agoAnd the most amazing part --- it's not even a scam. He really didn't cash out anything that was legal tender --- what he cashed out was a bunch of play money. Technically, this isn't a crime because it wasn't "real" money.
- toomuchtodo 4y agoThe DOJ is going after folks for front running [edit: better wording: insider trading, thx jcpham2 for pointing out my lazy language] NFTs on Coinbase. This is not a defense (“not real money”). Can’t have it both ways, that they’re digital assets when you want to scam, but it’s play money when you get caught. These people will be charged with a crime, and the government is going to find something that sticks. Securities fraud, wire fraud, whatever fits. https://www.justice.gov/usao-sdny/pr/three-charged-first-ever-cryptocurrency-insider-trading-tipping-scheme https://www.justice.gov/usao-sdny/pr/three-charged-first-eve... https://www.justice.gov/usao-sdny/press-release/file/1521186/download https://www.justice.gov/usao-sdny/press-release/file/1521186...
- jqpabc123 4y ago
- deleted 4y ago[deleted]
- Clent 4y agoIt's as "funny money" as any other security. Just because you feel they may be "funnier" doesn't affect the laws around selling and trading securities.
- jqpabc123 4y agoYour post is based on an assumption --- that crypto is legally defined as a "security". Do you have any reference to support this? If this is true, then the crypto market is subject to existing security laws. And government needs to launch an extensive investigation of crypto exchanges who have been operating without the required authorization or oversight. As I said, this cuts to the very core of the crypto market.
- toomuchtodo 4y agohttps://www.manatt.com/insights/newsletters/financial-services-law/sec-enforcement-case-labels-some-cryptocurrency-to https://www.manatt.com/insights/newsletters/financial-servic... > As noted above, in categorizing the tokens as a security, the SEC’s complaint makes reference to the Howey Test, under which a digital asset, including a “crypto asset security” will be deemed a security “if it constitutes an investment of money, in a common enterprise, with a reasonable expectation of profit derived from the efforts of others.” The DOJ’s complaint alleges that “the defendants made illegal trades in at least twenty-five different crypto assets and realized ill-gotten gains totaling approximately $1.5 million.” The SEC’s complaint claims that at least nine of the 25 crypto assets were “crypto asset securities,” and therefore the defendants’ insider trading of securities fell within the SEC’s “broad jurisdiction to regulate the securities markets and to bring actions for violations of the federal securities laws, including fraud and insider trading.” > None of the issuers of the nine “crypto asset securities,” or Coinbase itself, are named as a defendant in Wahi as this is an insider trading case. Issuers and exchanges of tokens should take caution, however, as the SEC’s stance in Wahi reiterates the SEC’s a broad view of digital assets as securities and its ability to regulate them. As duped mentions, if it's not a security, it's a commodity falling under the regulation of the CFTC. https://www.cftc.gov/digitalassets/index.htm https://www.cftc.gov/digitalassets/index.htm
- rzwitserloot 4y agoLet's say my company has $400,000 in earnings left over. I could pay it to myself but then I have to pay income tax and all that jazz. So, instead I buy something fungible-ish that isn't on anybodys immediate radar as a 'security', say, some Black Lotus cards from Magic the Gathering, and I then give those to myself. HA! I dodged it all! .... no. The spirit of the law is that this is a financial transaction just the same. BitCoin and all the other crypto currencies are no different. It's all play money. A story as old as time. For example, in the past (and even today), you can buy pricey paintings. Still fraud if you use that to dodge taxes. Still fraud if you steal a painting, and not because it's a physical object. It's something that is considered to have value, based on the notion that it is not hard to sell.
- jqpabc123 4y agoStill fraud if you steal a painting Celsius didn't steal anything.
- jakelazaroff 4y agoWhat do you call it when you abuse your insider role to close your own position in your failing investment fund, while hanging your customers out to dry?
- vkou 4y ago> What do you call it when you abuse your insider role to close your own position in your failing investment fund, while hanging your customers out to dry? Web3. Ask me a hard one next time. Less-flippantly: Probably fraud, regardless of how many disclaimers your website has in 4pt font.
- fjkdlsjflkds 4y agoIf you think that anything written in 4pt font on a website can turn "fraud" into "not fraud", I got some sweet bridgecoin I could sell you.
- woodruffw 4y ago"I convinced them to pay real money for fake money, stole the fake money, and exchanged it afterwards for real money" is not an argument that is likely to convince the SEC (or a jury).
- jqpabc123 4y agonot an argument that is likely to convince the SEC (or a jury). Mainly because your argument is wrong all the way around. Celsius never accepted any "real money" from anyone. Any "fake money" they allegedly "stole" came from their own account, not those of their customers.
- woodruffw 4y agoThat doesn't pass the sniff test: people clearly entered the market with actual money (even if they didn't directly pay Celsius), and left with none. You can argue (perhaps correctly) that they shouldn't have traded their real money for funny money, but it's ultimately no different from any other financial instrument.
- tossl568 4y agoI can't even see you your horse is that high
- yjftsjthsd-h 4y agoI'm not sure that quite follows. Yes, cryptocurrencies are currently a wild west, and there are a lot of scams, but I don't think it's fair to paint the whole space with the brush of a single particularly-blatant scam. It's like... when the whole Theranos thing came crashing down, it wouldn't be fair to say "well of course, most claimed medical advances are scams"; Theranos was a scam, and had some fairly major signs of being a scam, but that doesn't mean that most medical advances are scams. Likewise, Celsius was a scam, and AIUI looked like a scam pretty early on, just like a lot of other things in cryptocurrency are scams, but that doesn't mean "people involved in crypto" == "scam artists".
- cuteboy19 4y agoP(scam/crypto)=99.99% P(scam/medical)=0.3%
- atty 4y agoThe irony of the CEO’s t-shirt in that photo is… staggering.
- brink 4y agoIt's probably best to assume that most people blatantly lie on the regular for the sake of their agenda.
- xrd 4y agoThere is an asterisk at the end of that statement, and then in 8pt font it says "And neither am I, dipshit!"
- deltree7 4y agoGuns, Gold, Bitcoin or DuckDuckGo, VPNs, there is a planet full of gullible idiots whom you can sell anything to by shouting Government, Banks, Google, Amazon
- TipiKoivisto 4y agoI was about to write that but let me just copy-paste the first comment from the article: "Banks are not your friends. But obviously Crypto companies are not your friends either. "
- black_13 4y ago
- syntaxing 4y agoCrypto is pretty much speed running our existing financial institutions’ past history.
- dleslie 4y agoany% noreg tas
- jkingsman 4y ago[INFINITE MONEY GLITCH -- WORKING!!!]
- jqpabc123 4y agoWhat it's doing is giving techno nerds a free crash course in government, monetary policy and regulation --- or rather the lack thereof.
- kranke155 4y agoPretty much. Every piece of financial regulation is being justified by crypto scams in record speed.
- ip26 4y agoSo you're saying crypto will eventually race pass fiat and discover new regulations we don't have yet but will eventually need?
- kranke155 4y agoThat’s a fascinating idea but no I don’t think so. I think crypto is just liquidity for the future internet. The idea it has any purpose as a currency seems to me like a relic of the failed Bitcoin principles. Crypto is a bit like the early internet. People thought the liberation of information would make people smarter and democracies. Instead we built giant skinner boxes where people ignore valuable information in favor of random stimuli. It’s likely the most dystopian outcome for crypto is the most likely - something like Central Bank Digital Currencies where every transaction is logged and financial privacy is erased. At the edge you might have something like flexible pricing where anyone who doesn’t own a business will be charged more money for transactions if they have more money, thus making sure that capital owns everything and can’t be threatened in the future.
- MichaelCollins 4y agoPeople surprised by this might be the sort of people who try to cuddle a porcupine and are surprised when they get stabbed. That said, we have laws designed to protect stupid people from those who prey on the stupid, so I hope these execs get the book thrown at them.
- deleted 4y ago[deleted]
- daniel-cussen 4y ago
- potamic 4y agoIt's one thing to pull some elaborate and complex fraud, but you'd have to be really stupid to do such blatant insider trading in broad daylight. Are they taking calculated risks in doing this because surely they're getting prosecuted and having all their money taken away as well?
- jqpabc123 4y agobut you'd have to be really stupid to do such blatant insider trading in broad daylight. LOL! Either really stupid --- or really smart. He did nothing that was technically illegal --- because it was only play money --- i.e. not legal tender. The really stupid people are those surrendering legal tender in order to play a game with "Monopoly Money".
- geophile 4y agoI don't follow crypto, so these are actual questions, not trolling: - If Celsius is a trading platform, how can Celsius itself owe anybody anything? - My naive understanding is that cryptocurrency, being based on blockchain, is a log of universally agreed upon, legitimate transactions. So how can there be a liquidity crisis at all, let alone one in the billions? How is the platform allowing transactions not backed by actual funds?
- rodiger 4y ago1. Celsius was a lending platform which allowed customers to earn yield on deposited crypto. It also had exchange features, but the blow-up is primarily due to the lending aspect. 2. The liquidity crisis happened because of off-chain financing which models current lender/borrower agreements.
- zapdrive 4y agoIt wasn't a trading platform, and certainly wasn't doing the transactions on a blockchain. It was "lending" platform, where you deposited your crypto and earned interst. Apparently they loaned out your crypto to low risk individuals/companies etc. But turns out it was an outright scam. By the way, there are legit decentralised blockchain based lending platforms like Aave.
- tedivm 4y agoMost brokers- such as coinbase- perform their transactions using off chain methods. All the bitcoin in coinbase is held and owned directly by coinbase, and what users of coinbase actually have is a database table somewhere saying how much of coinbase's coins are marked as being owned by the user. Celsius is similar, but they also offer a loan system on top of it. So the coins you give to celsius are not only no longer owned by you, but they're also not even present in a Celsuis wallet.
- cube00 4y agoAt least Coinbase has a database table, Celsius had a spreadsheet. [1] [1] https://www.cnbc.com/2022/09/23/celsius-has-a-hail-mary-bankruptcy-plan-turn-its-debt-into-a-new-cryptocurrency-.html https://www.cnbc.com/2022/09/23/celsius-has-a-hail-mary-bank...
- woah 4y agoThis isn't crypto, it's just a shady investment fund that happened to invest in crypto
- geraldcombs 4y agoIf you have enough shady people involved in a particular activity, then that activity is effectively shady. Similar to the fact that if you add enough raw sewage to the water supply, you don't have a water supply any more, you just have more sewage.
- woah 4y agoLots of shady people were involved in web startups in 1999 (and still are tbh).
- smoldesu 4y agoAnd the only thing keeping these creeps in check is our legal system. Once you remove that, the bottom falls out on quality.
- rkho 4y agoShould we segue into a discussion about the Nigerian Princes who flood our email inboxes on a daily basis?
- woodruffw 4y agoThis is not a useful distinction: most cryptocurrencies and "DeFi" startups seem to be propped up by shady, unattested corporate entities.
- cimi_ 4y agoThese are the same people that are selling 'unbankrupt yourself' t-shirts after going bankrupt. See this (entertaining) video :) https://www.youtube.com/watch?v=rTwzM0_PjPw https://www.youtube.com/watch?v=rTwzM0_PjPw
- jedberg 4y agoOh hey look the consequences of a monetary system that isn't backed by a legal system (that is backed up by people with guns). The reason fiat money works is because at the end of the day if you run into trouble you have the legal system to make things right. And if the perpetrator of the crime doesn't listen to the legal system, there are people with guns/violence to back that up. That's why the whole system works -- because of the threat of violence. Crypto doesn't have that. It has a lot of advantages (I use crypto myself) but it also has a big disadvantage, for now. When the USA starts issuing it's own crypto they might solve this problem by requiring KYC to get the coins, but then of course you loose the anonymity aspect.
- simonebrunozzi 4y agoloose -> lose
- int_19h 4y agoIt doesn't have to be a legal system or a government in general. E.g. Rai stones are basically a public ledger system akin to a blockchain, but working through social convention. https://en.wikipedia.org/wiki/Rai_stones https://en.wikipedia.org/wiki/Rai_stones One could argue that, in this case, the entire society is "people with guns". Which is fair enough, but, again, it's important to keep in mind that this concept does not intrinsically require anything equivalent to the modern state.
- baxtr 4y agoBut wait! I thought decentralised is sooo much better??
- 4y ago
- arcticbull 4y agoI suspect "Celsius execs" are about to get a tour of US bankruptcy law's clawbacks policy. Anyone who withdrew money from Celsius in the 90 days leading up to the bankruptcy can be ordered by the judge to put it back in, and that timeline is extended to 1 year for insiders. [1] A bunch of the folks who thought they got out of Madoff's fund learned that lesson last time. [1] https://www.lowenstein.com/media/3095/beware-of-bankruptcy-clawback-suits.pdf https://www.lowenstein.com/media/3095/beware-of-bankruptcy-c...
- jeffwask 4y agoPonzi scheme gonna ponzi
- scifibestfi 4y agoThere's an update at the bottom of the article disputing the claim: "Your report that Mr. Goldstein withdrew millions of dollars in advance of the “pause” is flatly mistaken. The reality is that Mr. Goldstein did not withdraw even one dollar in the four weeks prior to the pause—to the contrary, he deposited over $90,000 in CEL tokens in late May, just three weeks before the pause. Most of the supposed “withdrawals” from our client’s account were, in fact, regular-course transfers between his accounts and involved corresponding deposits. Indeed, in the year before the pause, Mr. Goldstein had net positive deposits into Celsius (including interest), not withdrawals. Your account unfortunately distorts Mr. Goldstein’s position, as he currently has millions locked up in Celsius, making him one of the Company’s largest unsecured creditors. Nuke is proud of his work to create a secure platform for Celsius users, and has been working tirelessly day in and day out to help restructure the Company to the benefit of all its creditors."
- AtlasBarfed 4y ago"and has been working tirelessly day in and day out" Sorry, that is garden variety PR verbiage. "regular-course transfers between his accounts and involved corresponding deposits" So is it accounting, or fraud? Answer: Yes to both. If that statement had any credibility, there would be "independent auditor" and the named auditor in it.
- JaggerFoo 4y agoYeah, decentralization is the cornerstone of crypto. The reality of it all is that it is not. But don't tell that to the zealots. I'm pro-crypto, I think the innovation and paradigm are brilliant - I am developing a small project in crypto. I don't fool myself into believing the hype that exceeds it's capabilities, project organization or true architecture at hand. Cheers
- wnevets 4y agoPeople being burned by Crypto has to stop being so funny
- intrasight 4y agoWhy?
- wnevets 4y agobecause of empathy.
- fourseventy 4y agoWeb3 is fine
- omgomgomgomg 4y agoThis was an incredibly bold operation from the begining. They planned to exit one way or another, using the incorporated in the US to gain trust and the plan was not to just disappear, but file for bankruptcy as in "it happens". It is remarkable how they used the depositors or investors money to pay for their lawyers and yet the government considers this a chapter 11 instead of 7, as if there is any way to conduct business going forward. Reputation gone, money gone, the owners gone. Every time something like this happens, on such a scale, makes you wonder, how can so many people fall for this? I am not sure greed is the only factor, there must be more behind it, some shrinks will have a field day. And all the victims are now asking for a government intervention. There is no free lunch, even mashinkis money will come at a large cost. From what I read, many lost over 100k and some lost 7 digits, certainly some shady people amongst these. In conclusion, this was planned from the very beginning. If they could run this profitable, fine, if not, they hiding money followed by chapter 11 was the backup plan.
- onlyrealcuzzo 4y ago> Every time something like this happens, on such a scale, makes you wonder, how can so many people fall for this? Does it? If you're going to work every day to make a dollar, and your friend just sits on his ass and plays video games and makes a dollar every day off his CryptoKitty investments - and you can see the actual money in your friend's account - after a certain period of time, it's hard for anyone to resist, no matter how dumb it sounds. Even Newton lost all his money in the South Sea Bubble... Twice!
- Tangurena2 4y ago> Every time something like this happens, on such a scale, makes you wonder, how can so many people fall for this? The same way that people keep falling for the same sorts of conspiracy theories over the years. Add to that, the fear of missing out, and you can extra marvelous quantities of wealth from suckers. Several industries use FOMO to manipulate people into purchasing things that they probably shouldn't - like cars, MLMs and real estate (sample: "buy now, or forever be priced out of the market!"). After having been screwed (too many times!) previously by FOMO, I have an extremely adverse over-reaction to it: I have to walk away before I get angry.
- aaroninsf 4y agoThat rug really tied the room together, man.
- outside1234 4y agoIts almost like we need regulation for it
- deleted 4y ago[deleted]
- mrtweetyhack 4y ago
- BurningFrog 4y agoThe equivalent of $104M for Fahrenheit Execs.
- AviationAtom 4y agoIt isn't your crypto if you don't hold your own private key.
- michaelcao 4y agoUS should regulate the crypto industry ASAP. A lot of investors are losing money due to scams.
- varelse 4y ago
- 5350-uiop-1130 4y agoHere is an article about Federal reserve officials selling all their stocks dated September 10th 2021 to avoid "conflict of interest". I would ask you to open the S&P 500 and check the 10th of September 2021. https://www.reuters.com/business/finance/fed-officials-sell-stocks-avoid-apparent-conflict-interest-2021-09-09/ https://www.reuters.com/business/finance/fed-officials-sell-... It's not just about crypto, it's about who is allowed to use inside information. Celsius was a scam, if something seems too good to be true then it is. The same applies to LUNA and it's Anchor protocol which was giving 20% APY on the UST stablecoin. We saw what happened there.