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- The company’s carelessness has eventually led the company to face bankruptcy
- The company was lacking in risk management
A former head of Celsius has claimed that the crypto lending company’s carelessness in numerous ways has eventually led the company to bankruptcy.
If we go through a new report by CNBC, Timothy Cradle, a former director of financial crimes compliance, has said that the fortified company was reportedly ignoring the compliance law and was continuously indulging in manipulating the price of its original asset CEL, long ago filing for bankruptcy.
Celsius’s main issue was directing risk, says Cradle “The main reason for the company’s failure was interlinked by risk management. Undoubtedly, the company was serving people with the tools which people were really in need of, but the system was lacking in risk management.”
CNBC has also seen the internal document, which is clear evidence. The company was letting the clients deposit to use as a loan to cover funds and others inclined to pay higher earnings, then distributing the profits earned with clients.
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When the crypto market went down and the assets fell, then this strategy of the company eventually failed. As a result, the company had to stop using customer trades and withdrawals.
Cradle told the media that Celsius lacked a good team for applying international finance laws to its business model.
“ Compliance was a cost center of the company, but the compliance team was very small. We were only draining the money out but not putting back in because they were not ready to spend on compliance.”
The company’s former director highlighted the point that he had heard the company officials talking about the manipulation of the CEL during the 2019 Christmas party. Also, they kept talking about boosting the CEL token by actively trading and escalating the price of the token.
“ The employees were actively trading the token and manipulating the price. It got confirmed by two different conversations for two different reasons.”
Conclusion
After Celsius faced bankruptcy, many people came up with their reasons for the failure and justified it. There were many loopholes in Celsius’s functioning, which resulted in the company’s current position.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
