A new report by the examiner of bankrupt crypto lender Celsius Network details shortfalls in controls and operations at two of the company’s product offerings related to digital assets it held in custody for customers, raising issues of whether and how these users can get reimbursed, Bloomberg News reported. The programs, Custody and Withhold, were similar, and allowed users to keep their digital coins in the lender while supposedly maintaining ownership of them. The programs’ users have been claiming that they shouldn’t be lumped together with other unsecured creditors and should be reimbursed in full. In her interim report, examiner Shoba Pillay found that Celsius launched the Custody program “without sufficient accounting and operational controls or technical infrastructure.” As a result, Custody wallets were overfunded through June 10, but then became underfunded by $50.5 million — a 24% shortfall — by June 24. With the Withhold program, “no effort was made to segregate or separately identify any assets” associated with the accounts, the report said. “As a result, customers now face uncertainty regarding which assets, if any, belonged to them as of the bankruptcy filing,” Pillay wrote in the report. The findings may complicate customers’ efforts at reimbursement.
