Good day everyone,

I hope you are all well and having an excellent day, welcome to CryptoGod-1's blog on all things crypto. Today I will be doing an update regarding the latest video released by the man, the myth, the legend himself; Coffeezilla. He is back again with another video, this time investigating the ongoings at Celsius. Within Coffeezilla looks at multiple pages from court documents, insiders from Celsius talking, and Coffeezilla's very own personal investigation into what he now describes as fraud along with interviews from victims. To make matter worse, he also believes the founder will get away with it. Below I have broken down the key points of the video, and linked the video at the bottom so you can watch it for yourselves.

The Man Behind Celsius

The video begins by looking at the man behind the cryptocurrency lending platform, founder and CEO of Celsius Network, Alex Mashinsky. A Ukrainian entrepreneur and business executive, he filed Celsius for Chapter 11 bankruptcy on the 13th of July 2022. It begins by showing Mashinsky from an interview where he was explaining how Celsius worked while wearing a t-shirt which claimed 'banks are not your friends.' While I agree with that sentiment, either was Mashinsky. In that interview Mashinsky painted himself as a good guy, someone willing to 'take on the banks' and bring users along for the ride. He explains how he had several hundred millions of dollars of his own money in the platform as a user, earning a nice fat 8% yield and going on to explain how that 8% yield was available for all users who singed up.

It was that attractive yield which helped to draw in more users, as shown by some of the interviews with Celsius customers as part of the video. These high interest rates were the draw and while Coffeezilla makes it clear that high yields should be taken as a red flag, but at that time it seemed legitimate when compared with some other projects such as Luna (we all know how that went).

Mashinsky knew his stuff, explaining how the banks lend out users money, earning fat interest on those funds while only giving out less than 1% to its users who save with them. Mashinsky saw they opportunity to capitalise on this, claiming that Celsius Network would lend out crypto on users behalf and return 80% of the profits to the users as rewards. The draw was attractive for many users, who felt they would have the security and benefit of the platform while earning a hefty return for allowing Celsius to loan out their assets.

Celsius Loans

From here Coffeezilla goes on to explain the theory behind how Celsius Network functioned. As shown by Mashinsky himself, it was considered a ‘win-win-win’ scenario. They told customers their assets were backed up with collateral before being loaned out, meaning there was a guarantee if a loan was defaulted or if a bank-run was to happen. He promised safety, liquidity, and that Celsius at all times had more than enough coins to cover what they would owe users were the unthinkable to happen and users rush to hastily withdraw from the platform. This built the trust in the platform and its community, and Mashinsky was key to the belief that the platform at all times had over-collateralised loans. Constantly Mashinsky referred to how they were in a position that no bank in the world would be capable of being in, and this grew the hype and traction even further.

Celsius Collapse

The truth has finally been revealed as to what caused Celsius to collapse. A 600 page document was released by the examiner in the case, which notes how systemic lying and a Ponzi like scheme were some of the main factors behind the platforms collapse. Coffeezilla himself considers it to be fraud due to the amount of lying which happened. The claim of 80% returned to the community from the loans was a lie. According to the report Celsius could not have given up to 80% as it had nowhere near that available, in fact the platform was making very little off the loans. On top of that they were not regulating or managing its reward rates compared to its actual yield rate, meaning there was very little actual profit within the company.

The report further goes on to outline how the rates set by Celsius were merely determined by what was required to draw in new customers and beat the competition, with little to no regard in terms of their outlay being above their incomings. A new investors money will covered the pay-out to existing investors 'Ponzi Scheme' if I have ever seen one. 

As Celsius grew in users, the amount they owed in rewards also grew. Members of the management team began to realise the severity of the situation, with a need to cut the rewards rate, but Mashinsky felt users would leave and therefore would not approve any rate cuts. They could not risk losing customers by offering less in terms of rewards, so they needed to take action in other ways to garner profits. This included risky strategies such as giving out higher rates of unsecured loans, but Mashinsky kept up appearances and maintained that they did no unsecured lending, even though the rate of these risky unsecured loans was increasing.

Behind the scenes executives were furious with these increasing numbers. The level of risk was growing out of control but Mashinsky was still putting forward that Celsius was one of the safest crypto lending platforms around. In fact, behind the scenes they had reported loses of around $800 million through 2020/21 and even boasted of how the company survived roughly 50% of its invested users withdrawing their assets. He went on to claim:

"There's no bank in England that can go through a 53 percent drawdown and not go out of business. That's what's really laughable here."

By the end of 2021, Celsius owed rough one billion dollars and they did not have that sort of liquidity available. After claiming the company was one of the safest around, well, if so many people had not lost money with Celsius, then that would be the laughable part.

Crimes, Charges, and Victims

Interesting, Mashinsky is not being criminally charged for his role in the downfall of Celsius. Coffeezilla explains this off in a matter that 'had Mashinsky become profitable eventually then it would have been alright,' a simple fake it till you make it strategy. Or trying a business as others would call it. Whether or not its right, that is likely why Mashinsky is not being criminally charged. He is however being sued for some of the money, seeing as he is reported to have withdrawn around $10 million prior to the collapse. Incompetence is the excuse and why it is so difficult to prove what Mashinsky has actually done.

From here Coffeezilla shows testimonies of users who lost their funds from investing in Celsius. The 'it was my life's savings' and 'I could have really used that money which I couldn't access' stories. The sob stories of life, where those people chose to invest and ended up getting scammed. Is it wrong? Yes. Are they the first, or last, who this happened to? Nope. Unfortunately, one of the biggest risks in crypto is the actual exchange and platform a users invests with. Coffeezilla knows this wont really tug on the heartstrings, so he move onto the overall plan of Mashinsky; the Flywheel.

The Flywheel

The flywheel involves the main token of the Celsius Network, CEL. The CEL token was described as a 'self sustaining ecosystem' where users would earn interest in CEL. Celsius would give rewards in CEL and would also buy the CEL tokens back  to generate more demand for the CEL token. This is where the report really digs out some of the worst shenanigans of Celsius and Mashinsky.

Celsius create the CEL tokens so they could pay rewards in CEL, they then bought those CEL tokens off customers who wanted to sell them. The issues was that Celsius had no capital, so they made used of users ETH and Bitcoin to purchase back their own worthless token. They made it out they were using the profit off the loans to purchase back the CEL token, but in reality they were giving out customers own money for their CEL tokens.

However it didn't end there. Celsius decided to increase its purchase of CEL tokens for giving out rewards. This was also to increase the value of the CEL token, and they began timing when to buy the token so that the value of CEL would be propped up and inflated.

They then began selling CEL tokens for profit, particularly Mashinsky who had his own supply of these tokens. He sold a minimum of 25 million CEL tokens between 2018 and 2022 which brought him in around $68.7 million. Not bad profit for a sham token. Another founder of Celsius, Daniel Leon, sold around 2.6 million CEL tokens for a profit of $9.74 million. Celsius was the one buying these tokens, basically taking users funds from a company in debt to pay for the owners CEL tokens.

What really adds to the insult of it all is that Celsius was not only propping up the value of the CEL token, they also held around 95% of all the CEL tokens in existence. They never needed to purchase those additional ones from the founders, instead only did so to help Mashinsky and co pocket over $70 million from users funds.

The executives basically responded to questions regarding their practices in buying CEL by stating that when they bought the CEL off the open market they in turn increased its value. This in turn benefitted the company, but mostly Mashinsky who was pocketing the most from the sales. 

Due to the layout of how Celsius actually worked, as in:

• New users funds propped up the CEL token's value

• This primarily benefitted the executives

• Created a system where new users funds had to be used to pay out rewards due to the high rates

• New users were needed to keep the system going = Ponzi Scheme

All of this, according to the report, meant that basically since day one Celsius Network was a non functioning and insolvent company. 

Coffeezilla ends the video with more user testimonies, where they give their opinions and thoughts on the whole scenario. How worthless Mashinsky’s word is, how it doesn't matter if he meant to start a Ponzi or not, how he should be made an example of and face jail time.

Below is the YouTube video from Coffeezilla, titled “Exposing a Billion Dollar Fraud” which was released on the 6th of March 2023. Enjoy.

Have a great day.

Peace. CryptoGod-1.