In June 2022, the company gained notoriety when they indefinitely paused all transfers and withdrawals due to "extreme market conditions",[3] resulting in steep declines in the price of bitcoin and other cryptocurrencies.[4][5] On July 13, 2022, Celsius filed for Chapter 11 bankruptcy.[6]

Business model

The company facilitated lending and borrowing for its users.[7][8] Depositors earned interest by depositing qualifying cryptocurrencies, with the rate of interest dependent upon the cryptocurrency deposited (e.g., up to 6.2% interest on bitcoin).[9] The company paid the interest in cryptocurrencies, including in its own CEL token.[10] Borrowers paid between zero and 8.95% on bitcoin-backed loans, depending on the loan-to-value ratio.[9] Some of the money that Celsius used to fund the loans came from hedge funds that were looking for higher yields than banks pay.[9]

Celsius generated revenue from token sales, lending, bitcoin mining, and discretionary trading of cryptocurrencies.[10] Celsius claimed that up to 80% of its revenue was returned to its user community through interest payments on deposits made through its platform.[11][12] The company did not charge any fees to its users.[13]

On July 7, 2022, former investment manager Jason Stone sued Celsius, alleging that the company ran a Ponzi scheme.[14] On August 23, Celsius sued Stone, alleging that he lost or stole tens of millions of US dollars' worth of cryptocurrency.[15]

History

Celsius was founded in 2017 by Alex Mashinsky, Daniel Leon, and Nuke Goldstein.[13][16]

Growth

In March 2018, Celsius raised $50 million in its initial coin offering (ICO) of the CEL digital currency.[17][18] In April 2018, the CEL cryptocurrency began trading on cryptocurrency exchanges.[19] In advance of the ICO, Celsius listed its currency as a security.[13] In June 2018, Celsius launched its mobile app. In 2019, Celsius completed a $24 million equity round at $140 million valuation.[19]

Celsius was a major buyer of its own token, buying CEL interest it owed to customers on the open market. Crypto analysis firm Arkham Intelligence estimated Celsius had spent $350 million on purchases since July 2019.[20]

In August 2020, Celsius raised $20 million via an equity crowdfunding to support its operations.[21] In the fall of 2020, the price of Celsius's currency climbed more than 230% in less than a month.[19]

In October 2020, the company reported that its CEO, Alex Mashinsky, sold $500,000 worth of CEL tokens in one transaction. In December 2021, Mashinsky tweeted, "All @CelsiusNetwork founders have made purchases of #CEL and are not sellers of the token." Based on public data, Arkham Intelligence estimates that Mashinsky sold $44 million worth of CEL through exchanges.[20]

In November 2020, Celsius said it had plans to open an office in Australia and to expand its office in Israel.[13]

In December 2020, Celsius had $3.31 billion in assets under management.[22] In January 2021, Celsius had more than $4.5 billion in assets.[23]

In October 2021, Celsius raised $400 million in new equity from investors.[10][24] The funding round was led by WestCap, the fund led by former Airbnb executive Laurence Tosi, and CDPQ, Canada's second largest pension fund.[10] The funding round valued Celsius at $3 billion.[10][25] At this time, Celsius's office in Israel employed 100 people.[26]

In November 2021, Celsius acquired the Israeli cybersecurity company GK8 for $115 million.[27][28]