Celsius Network faces high scrutiny from the U.S. federal prosecutors
Bankrupt crypto lending company Celsius Network is subpoenaed by U.S. federal prosecutors, according to a Financial Times report on Saturday.
The subpoena — an order for someone to attend court — was issued a few days after Celsius Network froze customer accounts in June by a federal grand jury used by the U.S. Department of Justice in Manhattan. Per Financial Times, the bankrupt crypto firm trapped “the savings of hundreds of thousands of customers.”
According to a U.Today report on Oct. 11, a Cardano (ADA) investor lost more than $25 million due to the Celsius freeze. The investor named “Hirokhado Kohji” had roughly 60.9 million ADA tokens before the popular crypto lender went bankrupt.
While Celsius is going through the Chapter 11 bankruptcy process, there were reportedly almost 30,000 pages of court documents with the financial information of 600,000 user accounts. The judge, however, allowed revising users’ home addresses with their emails.
According to Financial Times, Celsius Network held a whopping $25 billion of customer assets while “promising customers eye-popping returns it generated through deploying the tokens in digital asset markets.”
Moments ago, @CelsiusNetwork filed voluntary petitions for Chapter 11 protection and announced that the company initiated a financial restructuring. https://t.co/vf5wsT6TMp
— Celsius (@CelsiusNetwork) July 14, 2022
When Celsius filed for bankruptcy in July, it held around $4.3 billion while owing roughly $5.5 billion, per Financial Times.
The bankrupt crypto lender has inquiries with several federal agencies, including the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) and the Federal Trade Commission (FTC), according to Financial Times.
Withdrawing millions of dollars
According to a report on Oct. 3, Celsius Network founder Alex Mashinsky withdrew around $10 million. The Financial Times report noted that Mashinsky used that money to pay taxes before freezing the customers’ accounts.
A few days later, U.Today reported that the top executives at Celsius withdrew $30 million worth of diverse crypto assets.