Timothy Cradle, the former director of financial crimes compliance at Celsius, has alleged that the company engaged in potentially illegal market manipulation, using customer funds to artificially inflate the CEL token’s price.
Key Takeaways
Timothy Cradle, former director of financial crimes compliance at Celsius, has accused the lender of deliberately manipulating the price of the CEL token.
Jason Stone, the head of a firm that managed over $2 billion for Celsius, separately accused the lender of price manipulation in a lawsuit filed July 7.
According to its bankruptcy filing, Celsius has a $1.19 billion hole in its balance sheet and owes $4.72 billion to its customers, but its terms of use mean they may never get their funds back.
Celsius’ former financial crimes compliance director told CNBC that the beleaguered lender was dealing with a range of internal failures years before it filed for Chapter 11 bankruptcy.
Celsius Faces Market Manipulation AllegationsCelsius deliberately manipulated the price of its CEL token, one of the firm’s former executives has claimed.
In a Tuesday CNBC interview, the former financial crimes compliance director at Celsius, Timothy Cradle, said he had overheard other company executives discussing “pumping up the CEL token” at a company Christmas party in 2019. According to Cradle, the executives spoke openly about their activities, and he said that similar conversations came up on at least two other occasions. “I don’t know a better way to phrase it, but they were in the market; they were actively trading and increasing the price of the [CEL] token,” Cradle said in the interview. “They were absolutely trading the token to manipulate the price.”
Cradle isn’t the only person familiar with the lender’s operations to accuse the company of engaging in potentially illegal market manipulation. Earlier this month, Jason Stone, the head of KeyFi, a firm that managed over $2 billion in crypto assets on behalf of Celsius, sued Celsius alleging the firm had failed to pay KeyFi for its services. In the lawsuit, Stone said that the lender engaged in multiple harmful and illegal business practices, including market manipulation, running a Ponzi scheme, and failing to implement basic accounting controls or risk management practices.
“The most egregious example of this was Plaintiff’s discovery that Celsius used customer bitcoin deposits to inflate its own crypto-asset called the ‘Celsius token,’” the lawsuit read. Stone also accused the lender of leveraging double-digit interest rates on its deposit accounts to “lure new depositors” and using those funds to repay earlier depositors and creditors, effectively running a Ponzi scheme.
Craig’s allegations come days after Celsius filed for Chapter 11 bankruptcy in New York. That filing revealed that the lender had a $1.19 billion hole in its balance sheet. Moreover, the documents show that Celsius owes $4.72 billion to its customers. Unfortunately for them, the lender’s terms of use stated that customers transferred ownership of their coins to the lender and could be treated as unsecured creditors in the event of liquidation. In other words, there’s a good chance that the firm’s customers will never see their funds again.
Disclosure: At the time of writing, the author of this article owned ETH and several other cryptocurrencies.
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