Celsius users concerned about personal information exposed in bankruptcy case


Celsius Crypto Lending Platform deposit for Chapter 11 bankruptcy on July 13, 2022. Although the Celsius case involves digital assets, it remains subject to the United States Bankruptcy Code under the Bankruptcy To research for the Southern District of New York.

Although it may be, a a series of unusual events have since Celsius filed for bankruptcy. For example, United States Chief Bankruptcy Judge Martin Glenn – the judge handling the Celsius case – said on October 17 that the court will look into the foreign for information.

Glenn specifically mentioned that “the legal principles applicable in the United Kingdom are not binding on the courts of the United States”, but he noted that these “may be persuasive in resolving legal issues that may arise in this case”. While the handling of the Celsius case will follow US bankruptcy laws, Glenn still aims to determine how the Celsius case should be handled.

Additionally, publicly available court documents related to Celsius’ bankruptcy proceedings revealed the personal details of thousands platform customers. A large financial disclosure form filed Oct. 5 contains client names, account balances, timing of transactions and more.

Although this may have shocked Celsius users, the publication of this information is subject to the US bankruptcy code. Adam Garetson, general counsel and chief legal officer of WonderFi Technologies, a Canada-based regulated cryptocurrency exchange, told Cointelegraph that the bankruptcy process should be open, public and transparent:

“It is a strong means of avoiding any suggestion of impropriety by the courts and the persons and entities involved in the procedure. As such, the courts can make requests and impose orders on the bankrupt entity, including with respect to the disclosure of publicly available information.

Still, it’s unusual that the committee’s investigations have uncovered such a large amount of customer information. This point was emphasized in a article of The National Law Review published on October 18, which states: “Debtors’ filings and Committee investigations have revealed much more to the public about debtors’ financial affairs, insider activity, and the path and direction of the bankruptcy case. The article also states that even though so much personal information has been leaked, “there is still little indication of how claims will be handled and reimbursed in this case.”

Celsius users face unintended consequences

As Celsius customers continue to wait for decisions to be made by the US bankruptcy court, the disclosure of personal information has brought added stress. To add insult to injury, customer data was recently made public on a website called Celsiusnetworth.com.

The website allows anyone to search Celsius users by name to reveal their losses, as well as the cryptocurrencies they had invested on the platform. If that wasn’t enough, the website includes a leaderboard that lists customers in terms of ranking for the biggest losses. Customer information can then be tweeted from the website, as a tweet button appears once the user information is displayed.

The creators of Celsiusnetworth.com – who go by the name “Avnx” – told Cointelegraph that the website was built using public data released as a result of Celsius’ legal operations. The source further remarked that the data on the website should not be considered a leak, although she noted that publishing this information could have consequences similar to those December 2020 Ledger Data Leak. “These data have been made public by Celsius. Whether we like it or not, it’s a fact,” Aznx said.

According to Garetson, sites like these are rare when it comes to bankruptcy proceedings. However, he mentioned that such events can stem from high-profile events that generate specific media attention or the attention of a particular community. Indeed, Avnx mentioned that Celsiusnetworth.com was designed to create “buzz,” rather than allowing individuals to easily explore Celsius creditor losses. Avx said:

“For example, the Twitter button is a humorous approach, even if nothing is funny in these events. However, it creates a buzz to highlight several things, such as the fact that this information has been revealed, the sums lost, or yet the balances of certain strategic people within Celsius.

Either way, the information revealed through the Celsiusnetworth.com website has led to unintended consequences for many Celsius users.

For example, John Carvalho Jr., a Massachusetts-based Celsius user, told Cointelegraph that his personal information posted on Celsiusnetworth.com caused great chaos, especially on Crypto Twitter.

Carvalho explained that he has the same name as the CEO of Synonym, which is a Bitcoin (BTC) software publisher. Following the news release, several Crypto Twitter users speculated that John Carvalho – the CEO of Synonym – had invested thousands of dollars in Celsius. This created an uproar on Twitter, as users began accusing the CEO of “buying altcoins”, among other things. Carvalho said:

“I joined Twitter in 2020 but haven’t used it much. However, on the morning of October 10, I was tagged multiple times because Crypto Twitter had confused me with John Carvalho, CEO of Synonym. users were talking about a lot of garbage, accusing John Carvalho of being a “shitcoiner” and calling him a “model”.

“I had no idea who John Carvalho was. It’s unfortunate that user information was leaked initially, but it got even worse when it spread on Twitter,” he said. added.

Carvalho noted that the situation was clarified following a tweet sent from the Synonym CEO’s personal account, which referred to the confusion.

Carlos DePaz, a Celsius user and certified public accountant, told Cointelegraph that while he thinks it’s unfortunate that users’ information has been made public, he doesn’t feel personally affected.

“If I was number one on the rankings list on the website, I might feel differently. It can be embarrassing for these people for others to know how much money they lost. It’s okay. It’s a live and learn situation,” he said.

Another Celsius creditor who wishes to remain anonymous told Cointelegraph that while he was unaffected by the public information leak, he believes this specific situation violates user privacy:

“I don’t know if information like this is still common knowledge in similar cases, but it definitely looks like a breach of privacy given that the information is financial in nature.”

Lessons learned

While it is unfortunate that Celsiusnetworth.com was created as a result of publicly available user information, it demonstrates the need for more education and regulatory clarity in the cryptocurrency industry. .

For example, DePaz shared that he initially viewed Celsius as a legit crypto lending platform, stating, “Celsius was partially intriguing because the website and regular ask me anything segments looked very legit. . It seemed that Celsius was run by people who knew what they were talking about, as they mentioned that the platform was licensed.

Carvalho added that he saw Celsius as an opportunity to build financially for his family’s future: “I would regularly listen to the ask me anything segments and I would hear Celsius saying ‘put your money with us and we will give you a return. ‘ I didn’t realize the risks involved at the time.

Ben Samaroo, CEO of WonderFi Technologies, told Cointelegraph that what is unique about the Celsius case is that much of the disclosure was not initially provided to clients. He said:

“High returns were promised, but the associated risks may not have been disclosed or understood by clients. who had already been in the industry.

While Samaroo is responsible for operating a regulated cryptocurrency exchange based in Canada, he pointed out that WonderFi also came under pressure from investors during 2021. running of the bulls to offer loan products similar to Celsius, saying, “We couldn’t do that anyway, because it would have required us to go through regulators in Canada. We should have presented a plan and carried out risk assessments, while ensuring that safeguards and investor protections were in place.

The current status of the Celsius case also demonstrates that platforms involving digital assets are still subject to traditional US laws. Shedding some light on this, Garetson mentioned that this case is another example that broad and formal regulation in the United States of the crypto asset industry remains pending.

“Traditional legal concepts such as contracts, ownership, and bankruptcy law continue to apply regardless of the status of any ‘crypto’ specific law,” he said. As a result, Garetson noted that the results of the Celsius case will be determined in real time — not by congress or a panel, but rather by individual courts who are likely less familiar with the industry. “This underscores a greater need for thoughtful and harmonized regulation in the short term, particularly with regard to the oversight of centralized trading platforms,” he said.

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