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Celsius was providing crypto custody without technical infrastructure

Celsius was providing crypto custody without technical infrastructure 13

A report noted that Celsius was providing crypto custody services for the customers without any proper control & technical infrastructure.

Celsius was a popular crypto lending platform but mismanagement of the user’s funds & highly volatile market situation resulted in the bankruptcy of this platform. On 12 June, Celsius officially announced that it halted withdrawal and further filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York.

On 19 November, Shoba Pillay, an independent examiner in crypto lender Celsius’ bankruptcy case, shared several details and confirmed that Celsius’ custody service was faulty because there was no separate or dedicated control & tech infrastructure.

Shoba’s investigation noted that mistakes by the Celsius team resulted in intermixing of the users’ wallet funds together.

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“no effort was made to segregate or separately identify any assets associated with the Withhold accounts, which were commingled in the Main wallets,” the investigation noted.

The investigation noted that co-mingling of users’ wallets means there is no certainty about which funds match that particular user.

She also noted that Celsius halted withdrawal nearby to 11 June, when the funds under the client’s wallets became underfunded.

Celsius was providing crypto custody without technical infrastructure 12
Celsius’ Surplus and Deficit of Digital Assets in Custody Wallets. Source: U.S. Bankruptcy Court.

Examiner also noted that mistakes done by the Celsius team was a part of the regulatory hurdles, that it was facing because of the New Jersey watchdogs.

On 20 November, the Celsius team confirmed on Twitter that users will get their claim by 3 January 2023 but those clients who do not agree with this date can submit their claims against Celsius in court.

Read also: Vitalik says the problem lies in people not in crypto tech

Celsius was providing crypto custody without technical infrastructure

 

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