Exposing a Billion Dollar Fraud

Celsius is a billion dollar company that Told its customers to unbank yourself With crypto but then last year they Declared bankruptcy and sold a new shirt Unbankrupt yourself now at the time I Reported on Extreme incompetence but Stopped short of using the f word fraud Because we just didn't have all the Evidence but today that changes because Of thousands of pages of new court Documents Celsius insiders talking and My personal interviews with victims make No mistake this was a gigantic fraud People's lives have been ruined and the Founder might get away with it so to Help shine a light on this issue here is My full investigation into the crypto Lender Celsius So when we're talking about taking back Power it's really not even from the Government it's really from corporations That dominate our lives and that system Right does now work for 95 percent of The people on the planet why because the Banks control the money in the world we Talk about all the money in the world Well Celsius does is really helps people Navigate in a safe way into this Environment so when you use a Celsius Wallet you know okay I'm gonna earn Yield and I'm gonna stay safe in the Safe environment because Celsius already Did the homework and figured out what's Safe normally we trust people that we

Think are acting in our best interest But what if these people are not acting In our best interest what if their Interests exactly the opposite of ours Should we continue giving them our money Or should we take the money and put it Somewhere else Stand Celsius and how they got 30 Billion in assets you first have to Understand what they were selling it Wasn't just a place to borrow or lend Money it was more than that it was a Battle against the evil Banks and their CEO Alex machinski was here to level the Playing field Thanks a lot your friends But Alex is your friend yes I I have a Lot of my own money in the company uh Several 100 million dollars as well I'm Talking about as a user of the service Not as a equity shareholder and so Basically everybody uh came in and said Hey can I take the same ride on the same Bus with you you're earning 8.8 percent Can I earn it then the answer is yes you Get exactly the same you have a hundred Dollars or a thousand dollars a million Dollars you earn the same yield as Everybody else and this pitch was really Attractive not to mention Celsius Offered eight percent on your money at a Time when your bank probably offered Less than one percent machinski said This is part of how he was battling the

Banks We basically thought okay how many People in the world want to earn more Money on their money yield and we said 8 Billion people are going to say of Course I want to earn more money on my Money so the customer was there the Second part was we can take on the banks And win why because 8 billion people are Going to join you and that's what's Really the key to make that decision Then we went and presented it to 200 Venture companies and they all say nope You're not going to win against the Banks so we went to the community we Actually went to the community said we Gonna build this for you do you want it And we raised 50 million dollars from The community and then we went to raised 400 million dollars from investors after We showed them hey a million and a half People showed up 30 billion in in assets they've given us 30 billion we've proven that people will Send somebody money to manage or digital Assets to manage and that was really a Breakthrough no one has done that in 700 Years of banking there hasn't been Anyone who actually taken on the banks In the real way this clearly worked Celsius customers told me that the Reason they switched was just to get a Higher yield on their money Honestly I was looking for a place to

Stake and earn interest and earn yield On my crypto I was actually first in Crypto.com and then I saw Celsius on YouTube it had higher yields and Everything so I kind of moved my stuff From crypto.com to Celsius people were Writing about Alex machinsky and all the Messaging on the website you know he's An entrepreneur that had created all These companies and he didn't need the Money you know this was billed as a high Yield savings account that was outside The traditional Financial systems now Look of course in hindsight maybe these High interest rates should have been Obvious red flags but at the time Because of other crypto projects things Didn't seem so crazy there was also Others that were much much bigger and Much higher you know look at Luna and Stuff like that so in comparison it Didn't seem as crazy at the time but it Wasn't just the competitors who Convinced people it was machinski Himself who gave a really compelling Argument that Banks were lending out Your money and keeping most of the Profit for themselves and he was going To do something different in the week Paying fees upon fees upon fees they Charge us 24. 24 per year to charge to Basically borrow money on our credit Card they charge us 24 but they pay us 0.1 so where is all that profit going to

Right it's going to the toll collectors So the opportunity is really to for all Of us to again take the go off the off The stall highway road and go into a new World where we don't try we don't pay Any tolls we don't pay any fees we act In our best interest and this is a Division that most people bought into Alex was going to lend out your money And pass most of the profits back to you 80 percent in fact and that was the Argument that was repeatedly said I Remember them talking about how 80 Percent of their profits were returned To users as a reward and so that's what I thought I was doing I thought I was Loaning money to someone that had posted Enough collateral to pay back in the Event of a default we then landed to the Institution the traditional the ones Paying the interest so we've collected Over 700 million dollars of interest From the institution and distribute most Of that 80 percent of that went to the Retail users 80 of whatever we collected Celsius next to you are benefiting Because we are lending that collateral You gave us redistributing 80 percent of That income with all the other Celsius It's a win-win-win now of course if That's not enough to convince you Celsius also said that in addition to Making high yield they were extremely Conservative they told customers that

There was collateral backing up all Their loans in case of a disaster and The key thing to understand here is that This secured loan with collateral is Much less risky than unsecured loans Where there is no collateral and Ultimately Celsius said because of this A Bank Run wouldn't affect them and Every day we have a process the daily Reconciliation process where our team Like 20 or 25 people Get on a call and grind to all the Tokens and all the coins and make sure That we have more coins and what we owe The community right that's our process And no Bank in the world can do that for You because they never have enough Assets to return for you if there is a Run on the bank and these promises of Safety and collateralization were key to People actually putting their money in With Celsius when I deposited my money In Celsius I thought their primary Business model was overpowerized lender I thought they would deposit more assets Than they borrowed money on the platform And that pay interest to pay return and So that way I said hey I'm not going to Lose my money because all these things All the loans over collateralized and Unable to earn the yield and look all of This sounds great and so far we've been Establishing why people were so excited About Celsius in the first place so if

That was the case then what's the Problem well the problem was Celsius Went bankrupt and not everything was as It seemed let's go back to the studio Crypto lender went from managing Billions in assets to filing for Bankruptcy in just a matter of months CNBC NBC obtained dozens of internal Documents that in part 's organizations prices drop and the Industry faces a liquidity crunch the Collapse of Celsius came as a huge Surprise to anyone listening to Alex Machinski all the way up to shutting Down he had claimed that Celsius had Billions of dollars in liquidity just Ready for withdrawals we have billions Of dollars in liquidity so anyone who Wants to withdraw that's that's a Service you can withdraw at any time so What happened if that was true why did It fall apart well the picture wasn't Clear at the time we heard allegations From people like Dirty Bubble media that Alex machinski was selling his own Tokens we also found out that Alex Withdrew money off of Celsius before it Shut down but at this point we didn't Fully understand why Celsius had Collapsed was it just incompetence or Greed these were open questions until a Few weeks ago because that's when the Court appointed examiner released her 600 page report detailing exactly what

Happened with Celsius in this massive Report report The Examiner details not Only systemic lying a ponzi-like scheme But also tells us what I think Constitutes fraud here's a breakdown of The report starting with the biggest lie Of all the interest you'd get on Depositing your crypto you see for years Celsius had been telling people they Paid what they did because it was 80 Percent of their profits they were Earning from all these loans and we're Very proud as well to pay out over 80 Percent of our revenues directly back to The community and so this is something That we are going to continue to do and We look very carefully at all of our Numbers on both sides to make sure that We are doing that and that's also what Is helping us decide the rates of every Single week that we're paying out on Coins but this was a lie according to The report Celsius did not distribute up To 80 percent of its revenues to its Customers because it had little to no Profits to even distribute Celsius also Made no efforts to set its reward rates Based on its yield and look I know what You're thinking if they didn't set the Rewards based on what they actually were Making as a company what did they set Them based on well I'm getting more Customers and according to the report Celsius consistently set its reward

Rates based on what they perceived was Necessary to beat the competition and For most of celsius's existence the Rewards it paid exceeded by substantial Amounts the revenues Celsius could earn So for those of you following along the Whole idea that we're paying 80 percent Of what we make was a total fabrication Celsius just wanted more customers which As you might imagine works when you're Bringing on more assets with new users Than you're paying an interest but Eventually when you have billions of Dollars in assets you have to pay Rewards based on that and the Celsius Team realized they had a problem but Even as some within Celsius management Attempted to lower reward rates Machinski quote overrode their Recommendation and refused to do so one Example of this was when Jason Perman a Celsius executive recalled machinski Saying that Celsius could not cut its Reward rates because of his belief that Our customers will leave us and that Quote our investors didn't invest in us To shrink they invested in us to double So with this new understanding that they Weren't going to be able to lower reward Rates they realized they were stuck with The other strategy trying to raise what They were able to make with their assets By employing riskier investment Strategies to try to get closer to

Profitability And guess what They lied about this too even as the Company started to make riskier Investments like offering unsecured Loans machinsky told people the opposite He said everything was business as usual Celsius is very very strict at who we Lend to right so we all in land to the First tier institutions first tier Exchanges we do not to do all kind of Unsecured lending like a lot of people Are talking about or saying Celsius does Unsecured we do not do unsecured lending But of course this wasn't true Celsius Internally had been talking about the Number of unsecured loans they were Giving out increasing shown here in Orange and internally on slack Executives were Furious quote I just Told him that the number is increasing And the overall ratio of collateral with Institutions is going down another Executive responded Yes so why does he Publish so dangerous statements everyone Out there if you have an unsecured loan Tell everyone that I'm a liar but in the End no one did call him a liar even as He literally asked for it here I'm Calling on anyone anyone who received an Unsecured loan go on Twitter make a fun Out of Alex machinski say hey I took a Loan here's my loan number you know I Took a loan from Celsius and I did not

Have to provide at least 200 collateral And through the next year mashinski Continued to boast about how safe Celsius was even as the team began to Engage in riskier behavior in the same Year Celsius would recognize 800 million Dollars in losses from some of these Investments koshinsky told the financial Times in June 2021 this from a risk Standpoint we are probably one of the Least risky businesses that Regulators Worldwide have ever seen around the time He was saying this Celsius was over a Half a billion dollars under water on Their liabilities as shown by the black Line which represents a net Surplus by The end of the year 2021 Celsius would Owe a billion dollars that they did not Have things were looking bad Wait a minute wait a minute I thought You said this was a fraud it is a fraud Maybe to you coffee There's another way of looking at this What do you mean well imagine I'm Defending Celsius as a lawyer you're a Mixologist and a lawyer hey I could pass The bar if I wanted to I already work at One but anyways what I would say if you Were coming in my client is look all This lying and losing money Standard fake it till you make it stuff They could have become profitable Eventually Now if they fail yes

But trying a business and failing That's the American dream coffee do you Actually believe that though it doesn't Matter what I believe if a single person On that jury was an entrepreneur Alex Would walk well Either way your hypothetical doesn't Even matter mashitzki isn't even being Criminally charged wait really Well I rest my case then yeah nice try But it's not that simple they're still Suing him for some of the money he's Just not being criminally charged and Let me guess you don't think that's Enough no I don't think it's enough I Mean it's a slap on the wrist it's a Financial speeding ticket for a guy who Ruined so many people's lives but that's My point coffee if you think it's so Wrong you gotta give me more than this But how you said it yourself they're Just gonna claim incompetence they faked It till they didn't make it ah but That's because the evidence so far is Lies and incompetence you need to show a Definitive step across that line that's The only way people are going to believe You Well that and what well this might be Ironic coming for me but it wouldn't Hurt to humanize the story a bit don't Get stuck in the technical jargon nobody Can follow that make me feel something As much as it pains me to say this I

Think you might be right let me see what I can do What does that money mean to me means a Lot actually I've been working since I Was 14. I was investing this my first Couple of jobs out of college ultimately Stopped us from buying a house because I Mean it was half of our down payment was Locked and you know I couldn't get it so It was a big impact actually honestly That loss was a culmination of many Years of work to be quite Frank I saw it As my way to escape what that money Means to me it's a lot more freedom with Uh what we're able to do as a family to Describe what the money I lost meant to Me is really hard because it's tied into A lot of what it feels like to be a Grown-up or an adult I I feel like I I Have this stunted developments you know I'm almost 40 at this point and I'm very Aware as a man that wants to be physical If we have a kid last year like we Wanted all right maybe by the time he's 20 I could show him some stuff but the Longer we wait more I watch my my dreams And my future and my hope to be like a Proper functioning adult slipped through My fingers it's it's hard to describe What that's tied into but it just feels Like I can't proceed with life if that Makes sense that does make sense and Hearing these stories made me realize Just showing lies isn't enough if I'm

Gonna demonstrate fraud I need to get to The heart of Celsius and that's when I Found out about the flywheel the Flywheel was Central to celsius's plan To become profitable and here's how it Worked Celsius was not just a crypto Platform they also had a crypto token Called cell and they controlled the vast Majority of it up to 95 so if the price Of cell went up theoretically the Balance sheet of Celsius would also go Up and they could sustain these insane Reward rates however in order to do so They needed people to actually want cell Token so the flywheel was machinsky's Plan to do that to create a positive Feedback loop and the way they did this Was set up cell token like a Rewards Where you could earn bonus interest if You held a certain amount of sell which Obviously incentivizes people who wanted To get the most out of their accounts to Buy and hold these sell tokens on their Website they describe this process as a Self-sustaining ecosystem where users Would buy sell earn more yield get more Crypto collect interest earn more yield Lend more coins collect more interest And buy more sell tokens now of course You might notice a problem here what if People actually go to sell their sell Tokens wouldn't that crash the price Well machinski had an answer for this Too he told the community that Celsius

Would buy sell tokens in order to pay Their rewards theoretically creating Demand out of thin air here's him Explaining this basically more visitors Usually translates to more app downloads And that translates to more deposits More deposit allows us to do more loans More loans generate more income and more Income means more income that Celsius Generates from these coins that people People gave us translated to us having To buy more Bitcoin ethereum sell token And so on so okay that's the flywheel Why does it matter well the flywheel and This cell token became the place where All sorts of shenanigans happened with Celsius because while the community was Aware that they were buying back sell to Pay rewards what they didn't know was That Celsius was using customer funds to Do so to buy their own coin what they Imagined they were doing was that they Were using all this profit they were Theoretically generating from making These loans to buy their own token but That wasn't the case this was because as We said earlier Celsius wasn't really Profitable at all so the only money they Had to buy sell token was their own Customers money but it gets even worse Because starting in 2020 Celsius decided To substantially expand its purchases of Cell for the purpose of increasing sales Price instead of buying sell when it

Needed to pay rewards Celsius began Timing its purchases so that they would Prop up sales price by creating activity In the market now of course the question Is here why would Celsius go beyond its Mandate to purchase more sell than Necessary and artificially boost the Price well perhaps it has something to Do with the top holder of Celsius being Machinski and his Executives and this Was the only way they could sell some of These tokens without crashing the price According to the investigation quote Between 2018 and June 2022 Mr machinski Sold at least 25 million cell tokens Realizing at least 68.7 million dollars On these sales Daniel Leon also a Founder of Celsius sold at least 2.6 Million in cell tokens for at least 9.74 Million dollars as well that's a cash Out of over 70 million dollars while Celsius was buying these sales to Prevent the price from going down quote Celsius often increased the size of its Resting orders to buy all of the cell That Mr machinsky and his other Companies were selling the former Chief Financial Officer would write we are Talking about becoming a regulated Entity and we are doing something Possibly illegal and definitely not Compliant some employees of course were Even more direct quote if anyone found Out about our position and how much our

Founders took in USD could be a very bad Look we are using users usdc to pay for Employees worthless sell and even worse In 2022 their coin deployment specialist Described their practices of buying up Sell and using customer coins as very Ponzi-like and a few weeks later when This person was asked where money was Coming from to buy sell this person Would say users like always this ladies And gentlemen is the core story not Merely lying it's a story of using Customer funds to buy out your Executives and manipulate your own Cryptocurrency so you can sell for a Higher price in fact celsius's own Purchases of their own tokens were such A large component of the market that Overlaying the price of Celsius with the Amount that Celsius was buying results In a near perfect match of the price Change and ultimately what this meant For the end user is that the money they Thought were being used for safe loans Or for generating yield were actually Squandered on this flywheel mechanism And the result was that Celsius just Didn't have the money to pay customers Back and what's so wild about this is That Celsius didn't even need to buy Their own cell token in the first place They already controlled 95 of all the Cell tokens in existence so they could Have just paid rewards from that instead

Of buying sell on the open market when Asked why they did it this way one Executive responded that the answer lies And who holds the most sell in other Words buying sell on the open market was What propped up the price which Benefited no one more than Alex Who Executives would refer to as the Biggest seller by far and depressing the Market selling up to 165 thousand Dollars a day as a result of all these Actions by the time Celsius would pause Withdrawals they had a shortfall of over 7 billion dollars owed to customers Which after a crypto crash was more like Four to five billion dollars either way Hundreds of thousands of lives were Ruined and this in my view is where Celsius crossed the bright red line Rather than just being an incompetent Lender they had created a scheme with Cell token where new users funds had to Be used to prop up sell token value Which benefited their Executives it also Created a need to use new customer funds To pay out old customers because of Their impossibly High rates of rewards To fuel growth according to the examiner This all meant that Celsius Network on a Standalone basis has been insolvent Since Inception this meant that new Users always had to keep on coming in to Keep machinski's flywheel going and when They stopped coming it was doomed to

Collapse this is the textbook definition Of a Ponzi scheme where new users Deposits are required to pay old users Withdrawals and according to the Examiner this actually happened Explicitly multiple times one example is From June 2022 when Celsius relied on 33.4 million dollars of usdc of new Customer deposits to fund withdrawals of Old customers which Celsius couldn't Afford and this unfortunately is the Real story of Celsius a Ponzi scheme Designed as a way to take on the banks And fight for the little guy but hey Don't take it from me I'm just a third Party take it from the victims Themselves I asked them what they Thought so this was an absolute fraud From the beginning I mean it turns out That a lot of these businesses that they Claim to be propping up Celsius were Completely fraudulent from what I've Seen from The Examiner more and more it Looks like it was just a a textbook case Of a Ponzi scheme I don't care if it was Apology scheme from the very beginning Or the very end it still was a Ponzi Scheme it doesn't matter if he meant to Start a Ponzi scheme right but the Second Cube got into those circumstances It it becomes fraud they were basically Losing money from the very start of the Company and they're literally lying in Front of everyone's faces saying yeah oh

It's totally fine yeah you could totally Keep our money in here yeah I would Totally invest more if I could as They're currently at that same time Withdrawing funds as they're looting on Camera locked everyone's faces she made A lot of egregious claims on his Twitter On his website on his podcasts he would Do claiming uh if Celsius ever went Bankrupts all the customers would get All of their funds back you know there's Tweets of him saying that and as a CEO Of a company you would take that word at Face value you would believe him when he Says your coins are going to come back To you and now that everything's coming To light and showing that essentially What he was running is a Ponzi I do Believe he should face showtime and the People that were also involved with it That were enabling that behavior there Needs to be an example set where we're Going to see more of these grifters in These in this space like sambeck and Freed and others who just take advantage Of people who believe in the technology Who believe in Innovation and you're not Supposed to steal people's money just Plain and simple you know it's uh it's Called theft it's a Ponzi scheme just Being strict of all of your wealth like That emotional psychological torture you Ruined people's lives Alex you ruined Their lives man I've seen so many people

Who are retired I've seen people who are Disabled I saw people who are basically In like different types of countries That their average salary might be a Hundred dollars a month and they lost a Thousand dollars and they don't even Know how to feed their families I've Seen people who are literally on the Verge of being homeless if not homeless Already and you see this CEO who is Gloating about this and taking money out I think without a doubt if like the Justice system prevails Alex should be In jail Well that's our story I reached out to Alex machinski about these allegations And he declined to comment except to say I should talk to a Celsius employee Named To clear up the fud now I talked to this Employee but they declined to go on the Record themselves and when asked if Anyone within Celsius wanted to speak With me I was told nobody is willing to Go on the record with you so that's Where we're going to leave that and as For Celsius the company they're trying To reopen their doors they have a new Plan to basically distribute whatever's Left back to the holders and lawyers and I'm not going to go too much into the Details of this plan but if you're a Creditor you can visit this page to Learn more it's not a perfect plan by

Any means but I'm not sure I have any Better ideas of what to do with such a Bad situation so that's it for me for Now I hope the way it was worth it guys For this video uh we're trying to level Up the production behind the scenes so If you enjoy uh all the in-depth Investigations please consider Supporting us on patreon these videos Are a lot of work to produce but either Way I'll see you in the next one [Music] Oh [Music] Foreign Foreign

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