‘Gross Negligence and Foolish Behavior’: Their Crypto ‘Bank’ Failed and They

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On Sunday, June 12, at 10:20 p.m., George — like thousands of other customers using crypto lending exchange Celsius — received an email reading: “Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap and transfers between accounts.”

Learn: Your Crypto Exchange Went Bankrupt? The Best Money Moves to Make Next, According to Experts

“I knew they had exposure but never thought they would lock up our assets,” George, who wished to publicly divulge only his first name for reasons of privacy, told GOBankingRates. 

George was shocked at first, but within minutes he went to Voyager, another platform he was using, and converted his assets there to cash.

“Then on Monday, Voyager limited their withdrawals,” he said. 

George, a 58-year-old consultant, used to do business with six different crypto platforms but went on to keep only Celsius, Voyager and BlockFi. “I hit the trifecta,” he said. “I thought I was diversifying — if one gets hit, I have the other two. But no. It’s insane. I picked the three worst platforms. I have to laugh about it.”

He now has $22,000 in frozen assets and says that his family has been on an “emotional roller coaster” over the past few months.

“I wish I would have pressed the platforms more on the transparency of who they were dealing with. They would have never revealed that, and I should have said, ‘Well, I’ll go somewhere else.’ Greed kept me there.”

Voyager Digital, Celsius Crash After Three Arrows Capital Collapse

Crypto lending platforms Voyager Digital and Celsius promised eye-popping yields to their customers — that is, until they both filed for bankruptcy in early July due to their exposure to the now infamous Three Arrows Capital. Three Arrows Capital went bankrupt after the implosion of Terra LUNA and its TerraUSD (UST) stablecoin.

“My problem is that I transferred all my wallet into cefi [centralized finance] platforms right at the beginning of the pandemic to get yield, a dividend, an extra kick,” George explained. “I went in when the timing was right… summer 2020.”

“Stablecoins were paying 10% interest (USDC, Tether) and when you compare that to banks, it was a no brainer.”

George explained that Celsius paid interest every Monday, sending an email to customers letting them know how much they made. 

“It was a dopamine hit. You feel it’s safe. They had $18 billion in assets under management at one point. Alex Mashinsky did an AMA every Friday live and I met him twice at conferences,” he said. 

As of August 5, his family is still in limbo.

“We hear very little from Celsius. As for Voyager, they had offers, one from FTX, but their lawyers pushed back and want to keep exploring options, they want to go through bankruptcy. Now it’s just time, we have to wait. And how much will we get back? Fifty cents back on the dollar? Ten?” 

As GOBankingRates…