November 29, 2023

Cryptocurrency lender Celsius, which filed for bankruptcy last month, is now asking to pay a former executive handsomely while it moves through legal proceedings.

Celsius, which once touted itself as “better than a bank,” filed for bankruptcy in July with about $167 million in cash on hand and assets worth $4.3 billion, while owing about $4.7 billion to users, according to bankruptcy filings. The company froze users’ accounts on June 13 as cryptocurrencies were plummeting in value and many investors were trying to withdraw their funds. 

Celsius is now seeking a judge’s permission to pay its former chief financial officer $93,000 per month while the bankruptcy filing makes its way through court. The company on July 25 asked New York’s Southern District Bankruptcy Court to allow it to hire former CFO Rod Bolger as a consultant, citing the “need for stability” and his financial expertise in its request to keep him on board. 

“His institutional knowledge and experience concerning the unique features of cryptocurrency are invaluable,” Celsius said in the filing.

However, Celsius customers are fuming at what many are calling a cash grab by untrustworthy leaders. Over 100 investors have written directly to Judge Martin Glenn, who is overseeing the case — some pleading for their lost funds to be returned and others accusing Celsius executives of criminal conduct.

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“[T]he lives of thousands of individuals have been destroyed by virtue of the actions of [Celsius],” wrote lawyers for investor Keith Suckno. “Before the Debtors cavalierly pay an insider nearly $100k per month, more information should be required from the Debtors including exactly what services will be required from Mr. Bolger, why those services cannot be performed by other employees.”

“This company is asking for more per month than the average citizen makes in a year!” wrote Celsius investor Mario Foti. Foti, who says he was a disabled Afghanistan war veteran, said he turned to Celsius as a means of raising funds because he had trouble finding employment.

“I have been saving for years to amass the sum that I had in Celsius,” he said. “This is gross negligence and a complete disrespect to the people that have lost their livelihoods over this. I pray the justice system does its job and does not allow the rich to continue stealing from the poor.”

It is not uncommon for a bankrupt company to offer a lucrative payday to an existing or former executive to help oversee its court-supervised reorganization. But such spending may leave less money left to distribute to creditors.

A representative for Celsius did not immediately reply to a request for comment.

“State of fear”

Meanwhile, many Celsius investors said they lost substantial savings on the platform.

“I’ve been in a state of fear, depression, anxiety, hopelessness at the prospect of losing this much of my life savings,” wrote Lindsey Derence, a 72-year-old woman who said she lost money investing in the company.

After years of accumulating cryptocurrency, Derence said she hoped to build her holdings until she could use the money to pay off her mortgage. “I was a depositor who thought I was depositing my cryptos in a safe digital bank,” she wrote. “I’m begging you to side with us and recover our hijacked deposits from this criminal.” 

Samuel Degregori wrote of losing $15,000, or about the bulk of his life savings. “I am ashamed, humiliated and quite frankly, disgusted, that I put all my trust into a company that has clearly participated in near fraudulent activity. I will be spending years trying to make back the money I lost,” he wrote.

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