Celsius Network

Celsius Network was a cryptocurrency lending platform founded in early 2018 by Alex Mashinsky. The company operated as a centralized finance (CeFi) entity, offering interest-bearing accounts, personal loans secured by cryptocurrency deposits, and a cryptocurrency exchange. Celsius allowed users to deposit various cryptocurrencies and earn interest, with rates reaching up to 17% annual percentage yield (APY) on some assets. The platform also provided crypto-backed loans to users and institutions. At its peak in May 2022, Celsius claimed to have USD 8 billion in loans, USD 11.8 billion in assets under management, and approximately 1.7 million users.

Celsius marketed itself as a safe alternative to traditional banks, promising users high yields, zero fees, and quick transactions. The company claimed to generate revenue through the spread between loans and interest paid, returning 80% of its revenue to users. However, behind the scenes, Celsius was engaging in higher-risk investment strategies, including DeFi deployments, Bitcoin mining operations, and various trading activities.

On June 13, 2022, Celsius abruptly halted all withdrawals, swaps, and transfers between accounts, citing "extreme market conditions." This action sent shockwaves through the crypto market and raised concerns about the company's financial stability. On July 13, 2022, Celsius filed for Chapter 11 bankruptcy, revealing a USD 1.2 billion deficit in its balance sheet. The bankruptcy filing showed that Celsius owed USD 4.7 billion to its users, who were considered unsecured creditors.

In July 2023, the Federal Trade Commission (FTC) reached a settlement with Celsius Network, permanently banning the company from handling consumers' assets. The settlement included a suspended judgment of USD 4.7 billion to allow Celsius to return its remaining assets to consumers through bankruptcy proceedings. Additionally, former CEO Alex Mashinsky and co-founders Shlomi Daniel Leon and Hanoch Goldstein were charged with fraud by the FTC for allegedly deceiving users about the safety and availability of their deposits.

Key customers and partnerships

Celsius Network's customer base primarily consisted of retail cryptocurrency investors seeking high yields on their digital assets. The platform attracted users from various countries, with a significant presence in the US and the UK. In terms of institutional clients, Celsius reportedly lent to large institutions and exchanges.

The company had a partnership with stablecoin issuer Tether, which invested USD 10 million in Celsius through the crowdfunding platform BnkTotheFuture in 2020.