Alex Mashinsky

Celcius reportedly prepping litigation against creditor for leaking internal info

Creditor Tiffany Fong has argued that she hasn’t done anything wrong, asserting that she didn’t break any non-disclosure agreements by reporting on the leaked information.

A court filing indicates that bankrupt crypto lender Celsius Network either intended to, or is potentially looking at taking legal action against crypto blogger and Celsius creditor Tiffany Fong over leaking internal information.

A screenshot shared by Fong shows that she currently has roughly $119,000 worth of crypto assets such as Bitcoin (BTC), Ether (ETH) and Polygon (MATIC) locked on Celsius, after the firm paused withdrawals in mid-June 2022, prior to filing for Chapter 11 bankruptcy the following month.

Since then, she has been actively reporting on the bankruptcy case as it unfolds via YouTube and other social media platforms. On multiple occasions, Fong has shared leaked internal information, which she claims was given to her privately by disgruntled former Celsius employees.

In an itemized sixth monthly fee statement from Celsius’ counsel Kirkland & Ellis International submitted to the bankruptcy court of the Southern District of New York on April 14, the law firm reported that it had worked 77 billable hours worth roughly $72,000 on an invoice titled “Tiffany Fong litigation.”

The law firm’s work on this case started on Jan. 26, with the last recorded hours of work being reported on Feb. 6.

While a concrete legal action doesn’t appear to have been formulated as of yet, the filing shows Celsius’ legal counsel was specifically looking into the leaked information Fong reported on via her social media accounts.

In the filing, Celsius law firm also outlined that it was drafting cease and desist letters for Fong, and also a motion to compel, which generally asks courts to enforce a request for information relevant to a case.

To name a few examples, Fong has reported on leaked internal information relating to company bids on Celsius assets, alleged audio of private company discussions and alleged transaction activity of execs such as former CEO and founder Alex Mashinsky.

Speaking with Cointelegraph, Fong didn’t mince her words as she alleged that Celsius is “using customer funds in an attempt to sue a creditor” over something that she asserts isn’t a legal issue to begin with:

“It’s bullshit I didn’t do anything illegal. I’m not an employee so I didn’t break an NDA [non-disclosure agreement]. I’m a creditor and they owe me 3.1 BTC & 11.6 ETH.”

Cointelegraph has also reached out to Celsius for comment on the potential litigation, and will update this article if the company responds.

Related: Celsius Network to make April 12 filing, including info on voting for restructuring plan

Adding fuel to the fire, Fong is currently in New York attending the 2023 NYC NFT event, and posting on Twitter on April 15, she revealed that found Alex Mashinsky and his wife Krissy Mashinsky out in public, and approached them.

A video posted to Twitter also shows the Mashinsky couple hurriedly walking away as other crypto content creators such as BitBoy Crypto (Ben Armstrong) approach alongside Fong in an attempt to engage them in conversation.

Magazine: Crypto Twitter Hall of Flame: Pro-XRP lawyer John Deaton ‘10x more into BTC, 4x more into ETH

Celsius reportedly prepping litigation against creditor for leaking internal info

Creditor Tiffany Fong argues she hasn’t done anything wrong, asserting that she didn’t break any nondisclosure agreements by reporting on the leaked information.

A court filing indicates that bankrupt crypto lender Celsius Network either intended to or is potentially considering legal action against crypto blogger and Celsius creditor Tiffany Fong over leaking internal information.

A screenshot shared by Fong shows that she currently has roughly $119,000 worth of crypto assets, such as Bitcoin (BTC), Ether (ETH) and Polygon (MATIC) locked on Celsius, after the firm paused withdrawals in mid-June 2022, before filing for Chapter 11 bankruptcy the following month.

Since then, she has been actively reporting on the bankruptcy case as it unfolds via YouTube and other social media platforms. On multiple occasions, Fong has shared leaked internal information, which she claims was given to her privately by disgruntled former Celsius employees.

In an itemized sixth monthly fee statement from Celsius’ counsel Kirkland & Ellis International submitted to the bankruptcy court for the Southern District of New York on April 14, the law firm reported that it had worked 77 billable hours worth roughly $72,000 on an invoice titled “Tiffany Fong litigation.”

The law firm’s work on this case started on Jan. 26, with the last recorded hours of work reported on Feb. 6.

While a concrete legal action hasn’t been formulated yet, the filing shows Celsius’ legal counsel specifically looked into the leaked information Fong reported on via her social media accounts.

In the filing, Celsius’ law firm also outlined that it was drafting cease and desist letters for Fong and a motion to compel, which generally asks courts to enforce a request for information relevant to a case.

To name a few examples, Fong has reported on leaked internal information relating to company bids on Celsius assets, alleged audio of private company discussions, and alleged transaction activity of executives such as former CEO and founder Alex Mashinsky.

Speaking with Cointelegraph, Fong didn’t mince her words as she alleged that Celsius is “using customer funds in an attempt to sue a creditor” over something that she asserts isn’t a legal issue, to begin with:

“It’s bullshit, I didn’t do anything illegal. I’m not an employee, so I didn’t break an NDA [nondisclosure agreement]. I’m a creditor, and they owe me 3.1 BTC and 11.6 ETH.”

Cointelegraph has also reached out to Celsius for comment on the potential litigation but received no response by publication time.

Related: Celsius Network to make April 12 filing, including info on voting for restructuring plan

Adding fuel to the fire, Fong is currently in New York attending the 2023 NYC NFT event. Posting on Twitter on April 15, she revealed that she found Alex Mashinsky and his wife, Krissy Mashinsky, out in public and approached them.

A video posted to Twitter also shows the Mashinsky couple hurriedly walking away as other crypto content creators, such as BitBoy Crypto (Ben Armstrong), approach alongside Fong in an attempt to engage them in conversation.

Magazine: Crypto Twitter Hall of Flame: Pro-XRP lawyer John Deaton ‘10x more into BTC, 4x more into ETH

10 crypto tweets that aged like milk: 2022 edition

Sam Bankman-Fried, Do Kwon and Alex Mashinsky might look back on this year and wish they had hired a social media adviser or logged off Twitter.

To put it lightly, it has been a wild year for the crypto sector.

In the span of less than 12 months, the third-most valuable stablecoin imploded, leading to a domino effect that saw crypto lender Celsius go bankrupt, Three Arrows Capital’s founders go runabout and one of crypto’s most “altruistic” executives flown home in cuffs.

In this article, Cointelegraph has selected 10 crypto-related tweets that have aged like spoilt milk.

Do Kwon — “Steady lads”

On May 10, just as the algo-stablecoin formerly known as TerraUSD started to fall below its dollar peg, the Terraform Labs founder attempted to allay fears of a further depeg, tweeting: “Deploying more capital – steady lads.”

Well, we all know what happened after. The collapse of the Terra ecosystem in May 2022 saw more than $40 billion wiped from the market in that month alone.

Since then, Do Kwon and the remaining Terra community have tried to revive the project with a newer stablecoin coming into the works. TerraUSD has since been rebranded to TerraClassicUSD (USTC) and is worth $0.02 at the time of writing.

Do Kwon — “Your size is not size”

Next on the list is Kwon’s famous response to crypto trader Algod, who outlined on March 9 that if LUNA “breaks new ATH’s I will short it with size. It’s a big ass ponzi, pretty sure VC’s will also hedge their investments on perps.”

Kwon then hit back by essentially calling Algod poor, stating, “Yeah but your size is not size” before adding, “$10 short incoming, everyone take cover.”

This of course was memed back to Kwon on many occasions during and after he went into damage control mode as TerraUSD spiraled out of control.

SBF — “Sell me all you want. Then go fuck off.”

Sam Bankman-Fried (SBF) has a near-endless amount of statements that likely look terrible in current circumstances. Not only has he lied about “assets are fine” but shortly before his company filed for bankruptcy, the FTX founder also left us with the $3 Solana (SOL) meme.

In a debate on Twitter from January, crypto trader CoinMamba got under SBF’s skin in January 2021, suggesting that SOL was a great shorting opportunity over the price of $3.

After a back in forth in which the two were trying to iron out a bet on the future price, SBF finally had enough of CoinMamba’s SOL taunting and said:

“I’ll buy as much SOL as you have, right now, at $3. Sell me all you want. Then go fuck off.”

The comment became legendary in the crypto community, particularly after the price of SOL went to an all-time high of $259.96 on Nov. 6, 2021.

However, CoinMamba appears to have had the last laugh, as Bankman-Fried’s firm catastrophically collapsed a year later.

Replying to the nearly two-year-old thread, CoinMamba gave Bankman-Fried a taste of his own medicine. “I’ll buy everything you have, right now, at $3. Sell me all you want. Then go fuck off.”

Alex Mashinsky — “All funds are safe.”

Amid the LUNA fiasco in May, rumors started to float that Celsius was having liquidity issues and could be heading for serious trouble, while others had claimed the firm had already been “completely wiped out.”

In a bid to quickly assure Celsius customers, Mashinsky responded to the rumors by stating in a May 12 tweet: “Notwithstanding the extreme market volatility, Celsius has not experienced any significant losses,” adding:

“All funds are safe.”

These four words went on to become a harbinger of doom for the industry.

A month later, on June 12, the firm paused all withdrawals. On July 13, it filed for Chapter 11 bankruptcy. Users are still battling to get even a portion of their funds back as we speak.

Celsius — “If you don’t have free and unlimited access to your own funds, are they really *your* funds?”

Accompanying Mashinsky is a classic from Celsius Network, in which the firm was touting the whole “unbank yourself” catchphrase. The crypto lender often suggested it was more trustworthy than the banking system.

In a Nov. 14 tweet from 2019, Celsius Network tweeted, “If you don’t have free and unlimited access to your own funds, are they really *your* funds?” before adding:

“#UnbankYourself with Celsius and join the next generation of financial services — no fees, no penalties, no lockups, just profit.”

That statement hasn’t fared too well in 2022.

Amid its Chapter 11 bankruptcy process, users have had zero access to their locked-up funds, while profits are in doubt, too, considering they might not get all the funds back.

Voyager — “We have the experience to […] weather any bear market.”

Following a similar line to Celsius and Mashinky, fellow bankrupted crypto lender Voyager published a lengthy Twitter thread in June, which now looks a bit out of place as 2022 comes to a close.

In an attempt to assure customers that the company was safe during the bear market following the collapse of the Terra ecosystem, Voyager assured customers it carefully manages “risk” and its mission is to “make crypto as simple as safe as possible.”

“Our straightforward, low-risk approach to asset management is the result of our decades of experience leading companies through market cycles. We have the experience to back our decisions and weather any bear market.”

Over the next couple of weeks, it was widely reported that the company was facing liquidity issues, and by July 5, Voyager had filed for bankruptcy.

TechCrunch — “The collapse of ETH is inevitable”

Next in line is a tweet dating back to 2018 from fintech news outlet TechCrunch that reads: “The collapse of ETH is inevitable.”

The tweet is accompanied by an extremely bearish article in which the author, Jeremy Rubin, predicts that “ETH — the asset, not the Ethereum Network itself — will go to zero.”

Rubin, who disclosed at the end of the article that he was a Bitcoin (BTC) and Litecoin (LTC) hodler at the time, bizarrely suggests that if the Ethereum network completes everything on its roadmap, no one will have any use for the asset.

At the time of writing, however, Ether (ETH) sits at $1,196 and presents a host of reasons for people to want to hold it: staking rewards, borrowing, lending and deflationary tokenomics.

Additionally, it also serves utility purposes, such as pushing through transactions on the largest smart contract network on the market.

Click “Collect” below the illustration at the top of the page or follow this link.

Avraham Eisenberg — “What are you gonna do, arrest me?”

Avraham Eisenberg, the crypto trader behind the $110-million exploit of decentralized exchange Mango Markets, makes the list due to a tweet from October that looks terrible in current circumstances.

The tweet itself revolves around a rather harmless back-and-forth regarding Eisenberg’s incorrect use of the @inversebrah tag, with Sheik Swampert noting, “You don’t call inversebrah on yourself dude.”

In response, Eisenberg said, “What are you gonna do, arrest me?”

As of this week, Eisenberg has actually been arrested and is facing market manipulation charges over the Mango Markets exploit, which he had consistently maintained was “a highly profitable trading strategy” facilitated via “legal open market actions.”

As such, this tweet has fast become a popular meme that will most likely live on for a long time in Crypto Twitter folklore.

Fortune — SBF, the “next Warren Buffet”

American business magazine Fortune has also got itself on this list for speaking in glowing terms of SBF back in August.

In a Twitter thread, the publication labeled him the “de facto leader of the crypto community” before suggesting that he was the “next Warren Buffet, Crypto’s white knight” and “Prince of risk.”

Kevin O’Leary — “I’m going to use FTX to increase my allocation”

Shark Tank’s Kevin O’Leary, also known as Mr. Wonderful, makes the list for his backing of FTX and its former CEO, Sam Bankman-Fried.

O’Leary’s now-deleted tweet came on Aug. 10, 2021, after he signed a deal to become an FTX spokesperson. In the tweet, he emphasized:

“Finally solved my compliance problems with #cryptocurrencies I’m going to use FTX to increase my allocation and use the platform to manage my portfolios.”

Unfortunately for O’Leary, FTX was anything but compliant, and the millionaire said he has likely lost the entire $15 million he was paid to be FTX’s spokesperson after taxes, agent fees and all the crypto he kept on the exchange was lost after the firm’s bankruptcy.

Celsius Network’s bungling showed why centralization can’t protect privacy

Celsius’ bankruptcy proceedings resulted in 14,000 pages of customer data leaking to the public. The incident displayed the pitfalls of centralized finance.

In Celsius Network’s recent court filing, the billion-dollar centralized finance (CeFi) platform exposed more than 14,000 pages of customer identity and on-chain transaction data without user consent — a prescient reminder that privacy absent decentralization is no privacy at all.

As part of its bankruptcy proceedings, CeFi lending giant Celsius Network disclosed names and on-chain transaction data of tens of thousands of its customers in an Oct. 5 court filing. While Celsius’ user base complied with standard Know Your Customer (KYC) procedures in order to open personal accounts with the CeFi platform, none consented to nor could have anticipated a mass disclosure of this scope or scale.

In addition to doxxing the multi-million dollar withdrawals of Celsius founder Alex Mashinsky and chief strategy officer Daniel Leon just before Celsius’ bankruptcy announcement, the disclosure directed tens of thousands of CeFi users to reconsider what resolute privacy protections entail and how systems that incorporate any degree of trust or centralization stand to compromise those protections.

To protect privacy, any degree of centralization or specialized authority that exchanges use in the future must eschew the bungled Celsius model. Otherwise, privacy will be rendered yet another false promise teased out in the fine print.

Uncharted territory

While unsavory, at the very least, Celsius’ mass data dump points to more than an outright distrust of authority and opaque organizations. As per usual, at the intersection of on-chain finance and law, there’s a lot of gray area.

An emergent and nascent industry, the blockchain space has already spun up a mess of unprecedented conflicts and disputes that neither existing legislation nor established case law has developed a reliable methodology to navigate. Even in the heavily nuanced legal environment of 2022, courts are not adequately prepared to uphold established legal principles in the on-chain domain.

Related: Coinbase is fighting back as the SEC closes in on Tornado Cash

In defense of their customers, Celsius’ legal representatives allege that they issued requests to redact private customer data from their disclosures. However, their requests were ultimately rejected by the court on the grounds that all Chapter 11 Bankruptcy proceedings require a complete and transparent “Creditor Matrix.” Obviously, such a bankruptcy rule was penned and passed several eras before the emergence of distributed on-chain lending protocols; a time when financial institutions did not have 14,000 pages worth of supposed creditors.

To make matters more unclear, Celsius legal officials have also claimed that, as per Celsius’ terms of service, all user funds deposited in the platform essentially belong to Celsius. Thus, as a self-regarded de-facto owner of all customer deposits, Celsius’ public release of customer transaction data treads further into hazy legal territory as to the parameters that define ownership — and, therefore, privacy protections — in the on-chain space.

Whatever the case, Celsius’ customers have permanently lost their privacy. The only sure verdict is that there can be no certainty in depending on an unprepared legal system to uphold privacy rights in fluid and uncharted territory.

Celsius isn’t alone

Although dramatic, Celsius’ meltdown is only the most recent in a stint of CeFi industry bankruptcies. The platform’s billion-dollar deficit presented in bankruptcy filings has been much less the exception than the rule.

Once one of crypto’s dearest and most powerful CeFi platforms, Celsius’ rise and downfall serve as a painful reminder to crypto critics and advocates alike that a core team can become a singular point of failure at any time. And further, centralized KYC procedures always carry some risk of exposure in legal proceedings.

The predicament tens of thousands of innocent crypto investors now face points to a much broader principle: that privacy cannot be truly conferred nor absolutely protected within the confines of a centralized system. Even with the best intentions in mind, professionals on both sides of the court have little legal precedent to draw from as they navigate the novel and perplexing territory.

Related: Government crackdowns are coming unless crypto starts self-policing

As on-chain data analytics become more sophisticated, hackers more conniving and personal data ever more valuable to marketing agencies and authorities, privacy-conscious individuals must exercise the utmost prudence in determining which crypto platforms best align with and protect their interests.

After all, Google, Meta, and the rest of the Web2 platforms that the crypto community has since dismissed as exploitative and archaic are about as private as Celsius and its CeFi counterparts. Each provides privacy as a service. Meanwhile, its users’ search histories, account information and browsing preferences are private to almost everyone — except, of course, the platform itself. As Celsius’ bankruptcy proceedings have proven, even the most well-intended custodians are not a sufficient substitute for decentralized architecture.

The true promise of systems built on blockchain is that what they confer, be it asset ownership, scarce monetary units or permissionless contracts, cannot be regulated, erased or modified on a whim. Their constitutions are written in code. Any and all modifications are coordinated and executed by decentralized autonomous organizations ( DAOs). There is no trust between counterparties, only a shared belief in the permanence of principle and the wisdom of the collective.

In the same way, privacy has been a prerequisite for personal freedom and self-expression since time immemorial, decentralization is today a prerequisite for privacy online — and, to that end, on-chain.

Alex Shipp is the chief strategy officer at Offshift, where he contributes to platform tokenomics, produces content and conducts business development on behalf of the project. In addition to his industry role as an expert in private decentralized finance (PriFi), he has also served as a writer at the Elastos Foundation and as an elected ecosystem representative on the Cyber Republic DAO.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Celsius founder reportedly withdrew $10M before bankruptcy filing: FT

The details of the withdrawal will reportedly be part of upcoming court filings, and it’s possible the founder and former CEO of the crypto platform could be forced to pay it back.

Celsius Network founder and former CEO Alex Mashinsky allegedly withdrew $10 million from the crypto lending platform just weeks before the company froze customer funds and declared bankruptcy.

The withdrawal was cited by sources from the Financial Times who said Mashinsky withdrew the funds in “mid to late May” prior to the June 12 pause on all withdraws.

Celsius was a popular crypto-lending platform with 1.7 million customers and $25 billion in assets under management but the prevailing poor crypto market conditions eventually led the company to a $2.85 billion gap in its balance sheet.

This led Celsius to pause customer withdraws in June before filing for Chapter 11 bankruptcy in July, with Mashinksy attempting to restructure and revive the company to be based around crypto custody services.

The withdrawal raises questions about whether Mashinsky knew ahead of time that the company would be freezing customer funds and withdrawals. 

However, a spokesperson for Celsius told FT that the founder withdrew cryptocurrency at the time to pay state and federal taxes.

“In the nine months leading up to that withdrawal, he consistently deposited cryptocurrency in amounts that totaled what he withdrew in May,” the spokesperson said, adding Mashinsky and his family still had $44 million worth of crypto frozen on the platform.

Meanwhile, sources told the FT the withdrawal was pre-planned in line with Mashinsky’s estate planning.

Roughly $8 million worth of assets withdrawn were used to pay income taxes arising from the yield the assets produced, and the remaining $2 million was made up of the platform’s native token Celsius (CEL).

Related: Learn from Celsius: Stop exchanges from taking your money

The questions will likely be answered when the transactions in question will be presented by Celsius in court in the next few days as part of disclosures by the crypto-lender regarding its finances.

There’s also a possibility Mashinsky could be forced to return the $10 million as in the 90 days leading up to a bankruptcy filing, payments by a company can be reversed to benefit creditors under United States laws.

Mashinsky resigned as CEO of Celsius on Sept. 27 saying his role “has become an increasing distraction” but said he would continue to focus on helping find a plan to return funds to creditors.

Celsius CEO Alex Mashinsky resigns

“I am very sorry about the difficult financial circumstances members of our community are facing,” writes Mashinsky.

According to a new press release published on Tuesday, Alex Mashinsky, CEO of troubled crypto lender Celsius Network, has resigned effective immediately. In explaining the decision, Mashinsky wrote: 

“I regret that my continued role as CEO has become an increasing distraction, and I am very sorry about the difficult financial circumstances members of our community are facing. Since the pause, I have worked tirelessly to help the company and its advisors put forward a viable plan for the Company to return coins to creditors in the fairest and most efficient way.”

Founded in 2017, Celsius Network was a rising star in the crypto-lending space, surpassing over 1.7 million customers, $25 billion in assets under management and $850 million in cumulative interest paid earlier this year. However, its fortunes took a drastic turn when the ongoing crypto winter exposed the firm’s risky, leveraged trading practices.

As a result, the company halted all consumer withdrawals in June and was left with a balance sheet gap of nearly $2.85 billion. Prominent stakeholders, such as the Quebec Pension Fund, lost almost the entirety of their investment in the company. Even Celsius co-founder Daniel Leon declared in court that his equity was “worthless.” The firm is currently undergoing bankruptcy proceedings. 

Mashinsky has tried to revive the company by restructuring it to focus on crypto custody. He also allegedly shared plans to turn its debt into cryptocurrency and airdrop it to creditors. After Celsius’ collapse, rumors circulated that Mashinsky tried to flee the United States, which he denied. Mashinsky was voted #64 on Cointelegraph’s Top 100 in Crypto and Blockchain list for 2022.

‘Go to jail:’ Community roasts Celsius-themed Monopoly board game

The Celsiusopoly board game is priced at $99, with the U.S.-based e-commerce company offering free shipping to U.S. residents.

The crypto community is having a field day mocking a new Celsius-themed Monopoly board game named “Celsiusopoly,” which has emerged on a United States-based online e-commerce marketplace. 

The announcement of the Celsius-themed board game came from the marketplace’s head of sales and partnerships, Stephanie Martin, who said the planning and production of the Monopoly spin-off came on the back of “months and months” of hard work.

According to the marketplace’s website, the Celsiusopoly board game is selling for $99.00, and some sales have reportedly already been made.

However, the ill-timed release of the board game has seen the crypto community relentlessly mocking the crypto-lender-themed product, with one Twitter user questioning:

“Who actually thought this would be a good idea… ? You have no respect for all people that lost their life or are in deep financial hardship cause of Celsius.”

Meanwhile, others argue that sales of the board game should be used to “make depositors whole,” and another user jokingly questioned whether the “go to jail” card will only apply to Celsius’ CEO. 

The Celsiusopoly board game has the Celsius logo centered in the middle of the board, with a “Do good. Then do well” slogan beneath, which appears to be in reference to a January 2021 tweet from Alex Mashinsky, the founder and CEO of the Celsius network.

In addition to the Celsius-themed game board, box, and play money, the game also features themed rewards and interest, property, customer care, compliance, loan and development cards, along with an instruction manual and a die. 

Images of the purported board game do not appear to include any branding from Hasbro Gaming, suggesting the game may not be an official Monopoly board game. 

Related: Celsius co-founder declares his equity is ‘worthless’ in court

Celsius is a cryptocurrency lending platform that officially went into bankruptcy on Jul. 13, following a long-term liquidity crisis and series of halting withdrawals from customers.

The cryptocurrency lending platform recently filed to reopen withdrawals for a minority of customers, with a motion for $50 million worth of the total $225 million held in the Custody Program and Withhold Accounts set to be released to owners.

While shipping of the new Celsius-themed Monopoly board game is free for U.S.-based residents, there aren’t any returns available for unsatisfied customers.

A Cointelegraph journalist’s attempt at purchasing the board game on the marketplace appears to go through, suggesting this could be a real product that people can purchase. 

BitBoy founder threatens class action lawsuit against Celsius

BitBoy Crypto founder Ben Armstrong said that Celsius won’t let him withdraw money from the platform without sending more money to it first.

Just two weeks after appearing in an ask me anything (AMA) with Celsius founder Alex Mashinsky, crypto Youtuber Ben Armstrong has announced he intends to file a class-action lawsuit against the lending platform and its chief executive.

Armstrong made legal threats via Twitter on Wednesday and has since provided more detail in multiple threads. His issue is centered on being unable to pay down loans with existing funds on the platform, and instead, having to deposit new funds to pay the loans off:

“[Our account rep] told us we had enough money in our account to pay off a loan. But we can’t use money in our account. We HAVE TO SEND CELSIUS MORE MONEY TO PAY IT OFF.”

“Imagine an insolvent company that you can’t withdraw your money from ASKING YOU TO SEND THEM MORE MONEY,” he added.

Armstrong stated that he is currently working through the process of getting all “disclosures, documents, loan details, etc” put together while speaking to attorneys to explore the best ways to go about the class action. Co-plaintiffs have yet to be added as Armstrong hasn’t “officially began moving.” 

BitBoy Crypto is the second most subscribed crypto YouTube account with roughly 1.45 million subscribers and primarily provides commentary on market news/events. The channel is only behind Coin Bureau and its 2.07 million subscribers. BitBoy Crypto has plenty of detractors, too, some of whom allege that he has been paid to promote dubious crypto assets in the past.

Armstrong’s sentiments toward Celsius have swung wildly from just two weeks ago when he was featured on the ask me anything (AMA) session with Mashinsky on Celsius’ YouTube channel.

“And today I’m the victim. Kicking myself for wondering how I let this get so bad and so far,” he said.

Celsius is battling either insolvency or it’s experiencing severe liquidity troubles as a result of the crypto market plunge. The firm paused withdrawals on Monday, and also reportedly shifted around $320 million worth of assets to pay down loans and avoid liquidation on decentralized finance (DeFi) platforms such as Aave.

One issue to a potential lawsuit, however, is if Celsius files for bankruptcy because it will trigger a provision called “automatic stay,” which would prevent creditors from pursuing collection activity against the firm.

Celsius has reportedly onboarded restructuring lawyers from Akin Gump Strauss Hauer & Feld to find potential solutions for its financial troubles. However, Armstrong claims that these types of lawyers “specialize in MOSTLY preparing companies for bankruptcy.”

“Even if Celsius does file bankruptcy, we have discovered some potential workarounds to still do a class action lawsuit (not effected by bankruptcy). Unfortunately I have to keep that one close to the vest for now,” he said.

Related: DeFi contagion fears and rumors of Celsius and 3AC insolvency could weigh on NEXO price

In terms of recouping funds from Celsius, there does at least appear to be a potential option for users with less than $25,000 on the platform to obtain their assets in the immediate future. Joshua Browder, founder of robot lawyer DoNotPay, tweeted a step-by-step strategy on Wednesday on how users might be able to get funds back:

“As of right now, these exchanges have not yet filed for bankruptcy protection. Therefore, they are subject to small claims court judgements. Small claims court cases typically take 1-2 months. As long as this drags on longer than that, this strategy will work.”