And yet the site apparently continues to accept deposits:
Business as usual. Oh yeah, check out our hello bar for that minor detail that withdrawal, swap, and transfers are "currently paused."
These guys are going to prison.
Business as usual. Oh yeah, check out our hello bar for that minor detail that withdrawal, swap, and transfers are "currently paused."
These guys are going to prison.
Their business model was fine. What wasn’t fine was not following it. Abra, Nexo, Gemini, and lots of other companies are business as usual with the same model right now.
A lot depends on whether the "business model" presented publicly was deceptive.
Read this passage from Alex Mashinsky's bankruptcy affidavit:
> Importantly, however, shortly after the Pause Date, on June 18, 2022, Celsius made the necessary changes to the Celsius App to prevent any new users from generating a deposit address and thus being able to deposit cryptocurrency on the Celsius platform. Moreover, as of the Petition Date, new users are prevented from even registering for a Celsius Account.
Celsius can't prevent people from sending crypto to addresses that Celsius controls, but that's a whole different story from "continuing to accept deposits."
You yourself wrote that they "can't prevent" deposits for existing accounts. It's very pertinent.
Did you read the affidavit? Your argument is specifically pre-empted and refuted:
> It is important to understand that users transfer their digital assets from external “wallets” to the Celsius platform by recording such transactions on the blockchain. These transfers are entirely user driven with no ability for Celsius to “approve” or “deny” a transfer to its platform. This is a feature of the underlying blockchain infrastructure and cannot be technically changed or otherwise prevented.
It is impossible to create, for example, a Bitcoin address that has an "off switch" that will prevent people from sending additional bitcoins to it. It's a feature that most blockchains simply do not support.
In other words, Celsius did not "design the system without an off switch." Satoshi Nakamoto designed Bitcoin without an off switch.
Notably, the feature of requiring receiver approval is inherent in blockchains using the Mimblewimble protocol.
In the past 12 years, Bitcoin lost 80%+ of its market value. Three times.
It came back before, so they might become solvent again eventually. But this was bad risk management.