Celsius cryptocurrency platform that collapsed may have been a pyramid scheme

The bankrupt cryptocurrency lender Celsius Network has been suspected of creating a pyramid scheme, and an investigation into the matter has already begun. A court-appointed expert, together with the Celsius creditors' committee, will select the head of the investigation, which should determine whether the platform used the money of new depositors to fulfill financial obligations to earlier investors.

Greg Pesce, a lawyer for the creditors' committee, has noticed signs of a pyramid scheme in Celsius' activities, but there is not enough information to make a definite conclusion. Expert Shoba Peeley will analyze Celsius' marketing strategy, including its statements aimed at attracting new customers, as well as the platform’s operations with its native CEL token.

The creation of the Ponzi scheme is not the only suspicion that has been brought against Celsius Network representatives over the past week. According to some experts and members of the cryptocurrency community, Celsius could have been profiting from cryptocurrency donations to Ukraine. After Russia invaded Ukraine, crypto exchanges such as Binance and FTX started collecting donations to help Ukrainians with digital assets by publishing the official addresses of Ukraine’s cryptocurrency wallets. Representatives of Celsius chose a different path — they created their own wallets to raise funds for Ukraine, but it is unknown where the money is now and whether it has reached the right hands.

Experts have found out that all the cryptocurrency in Ethereum was transferred to other crypto wallets controlled by Celsius. Representatives of the Ministry of Digital Transformation of Ukraine reported that they had not heard anything about donations to ETH from Celsius, and Ukraine probably never received the funds.

In early October, it also became known that representatives of the Celsius Network published confidential data of all their customers — more than 14,000 pages of information about users who used Celsius. The data includes full names, information on all transactions, including deposits, withdrawals, and liquidations. Both ordinary users and fraudsters gained access to information that should never have been made public.