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This is actually fantastic news. I predict that her scope will be expanded. And finally we will get to the bottom of this.
Some key excerpts:
“In their letters, the pro se filers repeatedly raised questions about the Debtors’ CEL token program and the statements the Debtors made about their cryptocurrency holdings and account offerings. For example, two investors explained that: Timothy Cradle, Director of Financial Crimes Compliance states that top executives were openly discussing how the company could use client funds to manipulate the price of CEL token (currently, an unregistered security), as well as describing a failure of risk management. According to Arkham Report and multiple validation sources, Alex Mashinsky sold $40,000,000 USD of CEL token in 2021 alone. This happened after the company was aware there was a hole in the balance sheet. This occurred on the same exchange as Celsius (the company) itself was buying CEL tokens to pay their users rewards.”
“[Dkt. 208 at 2; Dkt. 269 at 2.] Another investor asserted that “[i]n addition to the pathological lying, Mashinsky also was using customer funds to pump up the price of the CEL token.” [Dkt. 212.] “It’s seeming pretty blatant that the Celsius token was being manipulated and controlled by the company to their own benefit.” [Dkt. 184.]”
Finally someone is hearing us about the bullshit that went on there.
“The most common statement expressed in the pro se letters was that investors felt misled and deceived by public statements made by the Company and Mr. Mashinksy: [Dkt. 128.] Mr. Mashinsky and Celsius Management have been engaging in deceptive marketing of their platform and products using catchy phrases such as “Unbank yourself” and “Banks are not your friends” to imply that leaving funds with Celsius is just like depositing funds on savings accounts with traditional banks, if not superior. This deceptive marketing strategy continued while they continued to gamble away customer funds in volatile markets and failed to disclose the deteriorating financial health of the company and going as far as denying any problems via Mr. Mashinsky’s own Twitter account 4 days in the lead up to announcing the pause of withdrawals.”
A key detail about clawbacks:
“Dkt. 1042 (pro se motion to compel insider clawbacks).] Because the Examiner understands that the Committee has already begun an investigation of those claims, she does not seek to include that within her mandate.”
Fingers crossed that this leads to some actual positive changes. Cause the UCC seems to be dragging their feet.
Source: https://cases.stretto.com/public/x191/11749/PLEADINGS/1174910192280000000008.pdf
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