CNBC reported on July 19 that for the first time, two former employees that held leadership positions spoke out on the events that brought the company to its knees. The Celsius Network went from managing billions in assets to filing for bankruptcy in months.
Timothy Cradle, the former director of finance and compliance, alleged that top executives were active in the market, manipulating the price of their native token, CEL, with customers’ funds. Price manipulations are to artificially shoot up the price of a token or the other way.
Cradle said that the downfall of Celsius “was a failure of risk management.” The crypto lender lured over 1.7 million customers in by offering a 17% annual percentage yield (APY) on deposit. Alex Mashinsky, the CEO, deployed aggressive marketing tactics, putting on T-shirts with the inscription “Banks are not your friends.” In an interview, he had said, “If you think of a bank, their job is to extract as much profit as possible from you.”
The former compliance director added, “The compliance team was too small. Our resources were too limited.” When asked why such a critical team was understaffed, Cradle chuckled and said, “Because the [department] was sucking out money and not bringing any back in,” as the company is averse to spending on non-profit generation activities.
CNBC noted that according to an internal document, Celsius engaged in business activities labeled “high-risk” and “medium risk” without the compliance team’s approval. Cradle also accused the company of trading customer funds.
Nikki Goodstein, a former human resource officer at Celsius, also alleged that risk-taking was part of the hiring process and that most employees were hired without a background check. The company hired Yaron Shalem, its finance officer, who would later be arrested and charged with month laundering.
Continue reading on CoinQuora
Source: Cryptocurrency - investing.com
