A Note to the Celsius Community
blog.celsius.network
blog.celsius.network
FDIC [1] is a government insurance scheme on depositors' funds (up to a limit) with any FDIC-inssured bank of financial institution in case of insolvency.
SIPC [2] is the equivalent for brokerages and protects your cash holdings and securities.
Coinbase recently gave a warning [3] that crypto assets could be lost in the event of an insolvency. They also said they don't consider that remotely likely. But the point of that disclosure is that crypto is NOT an SIPC-protected asset.
The crypto mantra of "not your keys, not your coins" [4] is showing itself to be true.
I don't know what the outcome will be of anyone who has any assets in Celsius. It sounds like getting them out now may well be impossible but I haven't read this thoroughly so who knows? Maybe it's too late for Celsius account holders.
But I'd strongly advise anyone who holds crypto with any custodian to move it to your own wallet for your own protection.
[2]: https://www.sipc.org/for-investors/introduction
[3]: https://cryptoslate.com/coinbase-bankruptcy-wording-triggers...
[4]: https://medium.com/stakefish/not-your-keys-not-your-coins-fa...
They sent me a certified letter to an old address informing me of this the day after they did it. Claiming I owed taxes for a period when I wasn't even living in the country. This is some sort of mistake on their end that my accountant is going to have to sort out this week.
You can laugh at crypto all you want and say 'not your keys, not your coins'... but this event is taking a whole new meaning for me. I agree, Celsius and centralized services are bad, but it isn't like the government is any better. Don't think you're safe with your 4 letter acronyms. It is all fun and games until something like this happens to you.
Luckily they emptied the wrong account (which had little money in it) and I rushed to the bank to empty out the account with most of my money in it. Now I get to deal with the cashflow stress of it all.
Living overseas is particularly tricky because they want to see that you’ve established another state in the US with a stronger connection than California. If not, you remain a California resident. Yes, that sounds crazy
The state publishes a brochure with something like 40 criteria used to make the determination. Receiving mail inside the state is one indicator
https://www.ftb.ca.gov/forms/2020/2020-1031-publication.pdf
“You can check out any time you like, but you can never leave”
Thanks. That's crazy. I was already out of the country for 2 years before the period they are claiming that I owed taxes (and I was even paying taxes while I was gone)!
I guess this is going to be a fun battle, sigh.
Kind of like a final “fuck you.”
However, this happens more often in crypto. It is much safer to use a regular bank.
Source for your "more often" comparison though? Certainly people have had their wallets drained because they handed out the keys or stored their stuff on a centralized exchange, but that's not a lot different than a regular theft.
I don't know of anyone who's had a crypto wallet drained by a third party where the wallet was secure.
Bit of a tautology.
This is going back to the rsync v Dropbox discussion.
Yes, those who know all the steps necessary can spin up their own encrypted file sync server. 99.5% of the remaining user base will use Dropbox or some other managed solution.
Same with Coinbase and all the other exchanges. "nOt yOuR kEys" is not a good argument when there are millions going into ads and influencer videos pitching Coinbase as the de facto crypto equivalent to regulated brokerages. On Robinhood, people don't move their funds back to their bank acct after every single transaction and they don't expect to do so in crypto either.
At that point you can't blame the devs or anyone else involved except the users.
The Feds took almost a year to pay me the $700 theybowedbmenwhen I resubmitted my taxes due to forgetting to add one item I took a loss in.
On the good side, I did recently win the 4 bogus parking tickets that I've gotten in the last 6 months. So maybe I'll have good luck with this too!
Apparently, they have been having "computer problems" and have been sending out letters to people who don't actually owe any taxes (because I've been f'cking paying my taxes), like me. I'm not her only client that got jacked by this.
I'll be getting a full refund, including fees, in 4-6 weeks.
What even is a "franchise board"? I would assume something like a Gewerbeamt (entity to register businesses with)? Why do they have bank account data of you? How can they repossess property without a court order?
Background: I'm about to make the jump from academia to industry and in case I overestimated the value of my soul may end up in California. So low-key evaluating whether this could affect me too I guess.
But either way, it's still much better than crypto: There are recourses against state actions. At least in functional judicial states (which I guess is also a tautology xD)
Unless the police harass you on the street and ~~steal~~confiscate all cash you have on hand aka "civil forfeiture" [1]. There are entire small towns that have set themselves up as essentially legal highway robbers [2], and federal agencies also like to rob people [3].
There's also a Last Week Tonight episode around it [4], it's a bit dated but still relevant.
Here in Germany, we can at least contest seizure orders because we are named the owners of, say, a couple grands in cash... but in the US, the cash itself can be named defendant, which is ridiculous but entirely legal [5].
[1] https://www.aclu.org/issues/criminal-law-reform/reforming-po...
[2] https://www.washingtonpost.com/sf/investigative/2014/09/08/t...
[3] https://ij.org/press-release/highway-robbery-in-reno-nevada-...
[4] https://www.youtube.com/watch?v=3kEpZWGgJks
[5] https://www.washingtonpost.com/opinions/george-f-will-the-he...
Franchise board is the California tax agency. Yes, they have bank account tied to a person since that's where they deposit any refunds (or extract any payments they see fit if you don't pay by other mechanism). They'll certainly take money without any court order, they are the tax man and do whatever they want.
The story is very plausible, that's how they operate.
I can relate to your confusion a tiny bit, especially since you want to move here. When I was in Vietnam, a lot of people I interacted with have the dream of moving to America. Unfortunately, they just know what they see in the movies. They don't realize the harsh realities of things like the complexity of paying taxes. In Vietnam, it comes directly from your paycheck and there is VAT. There is no concept of State and Federal level taxes. Even better, you don't need to hire an accountant to do these things for you because if you mess up (and the system is designed to mess you up), it can get a lot more costly. Even with an accountant, it seems I'm not immune.
When I came back to America (not by choice, I got stuck here at the start of covid and VN shut its borders), this is also why I established residency in an income tax free state. I had to get a physical address, drivers license, car registration, etc... it was a lot of work.
My suggestion? If you're going to come here, do more research first.
Nor did they contact my accountant, who I've had for 20 years now and who's address is on file as my primary address for tax related issues.
It is also odd that they pulled the funds from one of my unused accounts that I just kept around for transferring money between the US and Vietnam (Citibank is in both countries and has free < 24 hour transfers) and left my primary bank account (which had the majority of my funds in it) alone.
The taxes they say I owe were during when I was living full time in Vietnam. I was still paying my US taxes during this time as well. This isn't the IRS, it is the FTB. I didn't own a business and I wasn't in California. None of this makes any sense to me.
You should be able to sort this out by filing nonresident returns for the years you were absent. If the state wants to contest the return, then you see them in court. Otherwise they have to refund you.
On the advice of my tax advisors, I've made a point of filing nonresident returns for multiple years after moving out of a state (and out of the USA), even if the earned amount is $0 and the owed amount is $0.
This starts the statute of limitations (where applicable) and it puts you into the bucket of "people who have filed tax returns, which we may or may not audit" versus "people who have not filed tax returns, who we may or may not think should have filed a return".
At the point where you stop filing nonresident returns, you ought to make sure you have essentially zero ties to the state. The nonresident returns you filed should have had a mailing address in a different state. Your drivers license should be from a different state (or expired). You should not be registered to vote in the state. You should not have any bank, brokerage, or other financial accounts with an address in the state. If you own a business, it should not be registered as doing business in the state. No one should be 1099'ing you at an address in that state. Anything that the state's tax board can access in their databases should point to you living elsewhere.
[Obligatory disclaimer that I am not a tax attorney and this is not legal advice. Consult your accountant or a competent attorney as your case may dictate.]
All of this rigamarole is probably necessary because there have been people in the past that were (tax) residents but tried to argue they were not to get out of paying what they owed. So now all the honest people have to jump through extra hoops because some yahoos in the past tried to 'work' the system.
The risk that you loose you coins because you are not able to secure your system is higher, then keeping them on an exchange.
Using a hardware wallet is also a risk. You can loose it, forget your pin or store your backup pass phrase in an unsave / unstable location. For example in a excel sheet or WhatsApp text message to yourself.
- workaround to not pay Western Union's fees
- investment
- trading
- protection against inflation
- money to buy goods from (sometimes questionable) places
- money to buy digital goods
- NFT Stuff
That’s not to say it should be mutually exclusive, but it’s not unique and probably simpler with hard currencies. And probably more safe guarded as well.
Not entirely correct. For the Kraken account, 2FA is a must AND you will still have to enter a code send to Gmail if you connect with an unknown IP address. Even if the PC would be compromised it is impossible for the attacker to send funds anywhere because for this you have a second 2FA. If you want to send money to a different account (does not matter if $ / € or ₿) you also have to verify this by E-mail and 2FA code.
My mum is a good example for a no tech person. You can't imagine what I have been through. To even think she would remember after 3 days, where she stored the keys, after 7 days that she needs them at all and finally after 14 days that I have ever told her anything about it. There are MANY people, where the exchange is the best option. I could go on with other examples, but my mum is a prime example of a non-tech person. For my mum, Internet Explorer is not a browser, but "the button to the internet".
You should still use Kraken, even if you are in Germany. bitcoin.de is vastly inferiour on many levels. Kraken, Gemini, Bitstamp and Coinbase are OGs and have a strong track record.
The last AMA before the withdrawal freeze was really pushing hard on the idea celsius is in great shape and being attacked by paid FUD'ers with an agenda. It's over for them. Even if they get the funds back, they've broken trust and everyone will withdraw. The only communication you can get will be written by lawyers until bankruptcy proceedings start.
That's what made me immediately drawdown my remaining balance (well ok I've got $30 in the still - who cares).
Whenever any financial holding group is giving you confidence like that or assurances everything is fine they are telling you they're screwed.
It should never even be a question. Think, say, Chase Bank or HSBC. Nobody even thinks about whether the bank has the liquidity for them to withdraw say $20,000. Once this becomes a subject of discussion, get the hell out immediately
There is only one place where FUD is applied where it shouldn't: the FOMO of missing a bullish trend, and this FUD causes people to invest their entire life savings into crypto. I spent some time on a major crypto currency Discord, and the number of people I spoke to who have gone "all in" on crypto is actually astounding. Just no sense of risk aversion.
People fear missing an opportunity to make money far more than they fear losing their money. Guess which happens? Then afterwards they realise the mistake they've made, and the suicide hotline numbers come out...
This trend is a fantastic lesson in why evolution has (generally speaking) settled on a bias toward loss aversion.
> We are pausing our Twitter Spaces and AMAs to focus on navigating these unprecedented challenges and seeking to fulfill our responsibilities to our community.
The last "AMA" was the CEO reading the same line (10 seconds).
We are grateful for your continued support.
Celsius
[1] https://www.reuters.com/markets/us/exclusive-texas-securitie...
Had this been, say, Robinhood, punishment would be swift and effective. As crypto has no regulatory framework or model by design, you can only place your hope in a benevolent oligarch who capitulates to the definition of the free market he espouses as well as the one he endures.
What was the punishment it received? A day in front of the Congress shifting blame? I would be a bit more cynic when dealing with these topics.
But yes, BTC dropping and scaring people into wanting their ETH tokens back should have been part of the calculus.
Three Arrow Capital lost hundreds-of-millions of UST during the Lunacoin / UST implosion a month ago. The fallout of that is still being felt. Celsius was related to Three Arrow Capital somehow. Etc. etc.
Honestly, I'm not yet sure how or why BTC is moving with them. But I don't think BTC is the source of this turbulence. I think a whole lot of shitcoins (Luna/UST in particular) was the first peg to fall. There's a direct link of Luna/UST to Three Arrow Capital, and a link from 3AC to Celsius.
The link then extends to stETH, which extends to ETH, which is then correlated to BTC.
[0] https://www.prnewswire.com/news-releases/celsius-network-sec...
But due to regulations not going it’s way, it could never sell/redeem the BTC, and now the shares in the entity have collapsed more than Bitcoin has.
GBTC being low just means that the stock market thinks BTC is going down for the near future. To the point where it is willing to trade GBTC at a discount to it's book value.
We all know GBTC is good on it's BTC holdings. We just don't know when it's regulators will let them sell and act as a fully functioning ETF.
Or that a stock in a fund which cannot sell its BTC is even less useful and appealing than holding BTC itself.
> We just don't know when it's regulators will let them sell and act as a fully functioning ETF.
If. We don't know 'if'. A BTC black-hole being cheaper than bitcoin is not that surprising.
Your theory doesn't match reality. GBTC was trading at a premium a few months ago.
I personally believe GBTC is just able to predict the future direction of BTC. It is easier, and more convenient, for most people to speculate upon the value of BTC using GBTC. When the market thought it was going up, it bought GBTC at a premium. Now that the market thinks it is going down, it sells GBTC at a discount.
--------
GBTC, as a basket of BTC, is more open and honest than using pseudo-baskets, like MicroStrategy, to speculate upon the price of cryptocurrencies.
The general stock market wants to play speculation games, with GBTC, BITI, MicroStrategy, and maybe even Tesla a little bit (sure there is a car company attached but everyone knows Tesla has a large BTC holding).
Making nothing out of something happens all the time in business, this wasn't even that. A Bitcoin is still worth an absurd amount of money.
I'd have a lot more respect for this group if they just said "As you must know, anything paying 18% is risky and this risk didn't pay off. The money is gone, you may receive a few pennies in liquidation but we doubt it. Watch this space, we'll have another high risk/high reward gamble for you soon."
Instead they are prolonging the misery for their customers (assuming they aren't about to make everyone whole) and solidifying the idea that this wasn't a risky tech business enabling tech and financial savvy people to gamble but is instead a bank that tried to exist outside of banking regulations.
No, not really. I can’t think of a time where the DJIA has lost 70% of its value, can you?
The universe of indices is much wider than DJIA too.
Celsius Is Crashing, and Crypto Investors Are Spooked - https://news.ycombinator.com/item?id=31770195 - June 2022 (3 comments)
Crypto Lender Celsius Hires Restructuring Lawyers After Account Freeze - https://news.ycombinator.com/item?id=31747583 - June 2022 (8 comments)
Celsius Appears insolvent, and it's taking the whole crypto market with it - https://news.ycombinator.com/item?id=31734660 - June 2022 (99 comments)
Celsius Is Collapsing Here's Why - https://news.ycombinator.com/item?id=31734067 - June 2022 (8 comments)
“Celsius has the reserves to meet obligations” (June 7, 2022) - https://news.ycombinator.com/item?id=31732471 - June 2022 (7 comments)
Quebec pension manager and WestCap invest $400M in Celsius (2021) - https://news.ycombinator.com/item?id=31725987 - June 2022 (8 comments)
Bitcoin plunges below $24,000, Celsius Network temporarily halts all withdrawals - https://news.ycombinator.com/item?id=31725373 - June 2022 (16 comments)
$200B wiped off crypto market over the weekend - https://news.ycombinator.com/item?id=31724940 - June 2022 (9 comments)
Major crypto lender Celsius freezes withdrawals as markets tumble - https://news.ycombinator.com/item?id=31723286 - June 2022 (403 comments)
DeFi lending giant Celsius halts withdrawals - https://news.ycombinator.com/item?id=31722536 - June 2022 (1 comment)
Crypto Platform Celsius Pauses Withdrawals - https://news.ycombinator.com/item?id=31720277 - June 2022 (149 comments)
(I honestly clicked on the link because I thought I was going to read a snarky post about Fahrenheit being the better system. Surprisingly, this is more interesting!)
https://scribe.froth.zone/m/global-identity?redirectUrl=http...
PS more info here https://scribe.froth.zone/
So this means that the official instance is https://scribe.rip/
and not the one I linked above.
There is a list of instances here https://git.sr.ht/~edwardloveall/scribe/tree/HEAD/docs/insta...
- Take people's money to form [insert random Crypto bank-like scheme]
- Invest the money into high-risk investments
- If investments don't pay off, declare bankruptcy. You were gambling with someone else's money
- If investments do pay off, you're rich. You just need to return other people's money, but you keep the upside
There are a ton of schemes like this in traditional investing, but limited to scamming "sophisticated investors" or "accredited investors," depending on the scheme. For crypto, it seems like regulation hasn't caught up, and companies scam random consumers.
By "legal enough," I mean legal enough that scammers can convince themselves they won't land in prison.
https://www.google.com/amp/s/wccftech.com/the-much-battered-...
Their liquidation price is currently $13,604 USD/BTC. The liquidation is controlled by a protocol and not subject to human intervention.
Celsius pulled out of this deal to 'protect their community'. In fairness this action did protect both themselves and their community from any large losses due to the Terra/Luna incident, but it appears that other members of the group of crypto enterprises that did sustain larger losses are (understandably?) significantly salty at Celsius for pulling out of said deal.
True or not, a healthy business can sustain a coordinated attack, and if Celsius doesn't survive then it just means they got their risk analysis wrong for such an edge case. Standard business decision fine-line walking between risk and reward falling off the wrong side.
Maybe Celsius were the first one's to realise that attempting to save Terra/Luna was a fool's errand in the first place, or maybe Terra/Luna could have been saved if Celsius hadn't have pulled out. Given what's come out about Do Kwan since, I'd be guessing the former.
Mergers and acquisitions by bankruptcy proceedings and the consolidation of power by the already powerful. Somewhat ironic if that's the case, playing out in the cryptocurrency arena.
What kind of “attack” are you imagery that made them insolvent (or close enough to it)? They’re not uniquely impacted by any particular crypto crashes, so it’s hard to see how something could have been engineered to take them out.
There may also be a Celsius-token short-squeeze being coordinated in order to help Celsius maintain some level of perceived value.
Who knows the reality, but it's interesting in a financial-trickery context.
It reminds me of the sort of person who believes they share some emotional connection with their favorite celebrity. With delusions like these, is it any wonder how powerful people can get away with so much?
This isn't directed at you, but at whomever made this story up.
> people then create a dramatic narrative of how that company was actually looking out for them!
That's actually what the Celsius CEO, himself, said, against accusations that Celsius was hiding losses due to Terra/Luna collapse.
CEO has to decide between:
a) tell the truth: we don't have your money b) lie: everything is fine and we're protecting your money
When people say something, try to understand what would be best for them. Therein lies the truth.
Despite it having been visible for weeks that something was going down, no, it was evil hedge-funds that killed it.
It’s just conspiracy thinking.
I know people like to romanticize 1920s but I didn’t personally want to live through a run on a “bank”.
According to many posts here I’m not supposed to ever interact with a centralized entity but I should manage my own wallet and keep my keys printed on paper buried in the backyard. Yeah that sounds like a path to mass use case adoption of cryptocurrency.
The only ones who are going to walk away from this intact are the lawyers who will be litigating the wreckage here for decades. So much of this industry happens in the grey area of the law which was fine when everyone was getting rich. Now you will have an angry bunch of populist bag holder voters looking — fairly or not - to blame someone else for losing the kids’ college fund in some dodgy levered alt coin scheme.
if
People puting funds into custodial wallets deserve to loose it all