Celsius Network LLC used customer funds to cover shortfalls in its obligations to pay lofty yields and to prop up the value of its CEL token while some company insiders were cashing out, according to an examiner’s probe into the crypto lender’s practices before its collapse last year, WSJ Pro Bankruptcy reported. Celsius sold customers’ Ethereum and bitcoin to fund purchases of the firm’s proprietary CEL token since it wasn’t earning enough yield through its various investment activities to cover obligations under its flagship customer offering, according to the report by Shoba Pillay, the examiner appointed to probe the firm’s business practices. The increasing price of the CEL token made it possible for Celsius insiders to make millions of dollars selling it before Celsius went bankrupt, the examiner’s report found. Celsius founders Alex Mashinsky and Daniel Leon sold a substantial portion of their holdings of the native digital coins, realizing at least $68.7 million and at least $9.7 million respectively, between 2018 and when Celsius filed for bankruptcy in July, according to Tuesday’s report.
