Kathleen Breitman, cofounder of Tezos says that the eventual bankruptcy filing by Celsius Network, a troubled crypto lender, is not surprising.
Breitman, commenting on the unfortunate turmoil that’s threatening to suck any pending warmth from an already cold crypto winter, said the lender’s trajectory towards trouble was inevitable.
Celsius was the winner
According to Tezos’ co-founder, the business model was suspect, with a high yield for investors, and the crypto price crash that spelled doom for Celsius.
The end was near for crypto hedge fund Three Arrows Capital, which filed for bankruptcy. Voyager Digital followed suit.
In its June filing, the lender indicated that total liabilities stood at $5.5 billion with more than $4.7 billion owed by users. The balance sheet has a $1.2 million hole because of the $4.3 billion in total assets.
#Celsius It is missing $1,190,000,000 @Mashinsky destroyed everyone. You lost all your money to him and his schemes because you ignored my pleas to save you. pic.twitter.com/Z7BjoqkzJ8
— Richard Heart (@RichardHeartWin) July 15, 2022
Celsius was subject to a class-action lawsuit by an ex employee before the bankruptcy filing. According to the lawsuit, the crypto lender was accused of not following risk management procedures and manipulating the market by artificially increasing the CEL price, its native token.
Celsius claims that Celsius operated more like an Ponzi scheme and used customer deposits to maintain withdrawals before it was brought to a halt.
These are the signs that a company is doomed to failure.
“For those of us who’ve been in this industry for quite some time, it’s completely unsurprising that something like Celsius would go bankrupt,” she told Bloomberg Technology.
She added that this outcome was likely “because economics does have laws that transcend the word blockchain.” The unfolding, she explained, is a “shakeout” of what wouldn’t just work – especially for businesses that staked their future on “the theory that numbers will always go up.”
