Ben Armstrong aka “BitBoy Crypto” is a YouTube influencer who accepted payment to promote crypto. Everyone knows it, and he does not deny it. But what has angered him lately is something he has both publicly endorsed and used as a client.
That something is the Celsius crypto lender.
- We dig deeper into his reproaches, because even a peddler can shed light on an unstable situation.
- “Our money was mismanaged,” Armstrong told Axios.
What is happening: Armstrong concocted a tweet storm complain about Celsius after the platform suspended withdrawals, among other services. We discussed the shutdown of Celsius last week.
- Since that shutdown, Celsius has yet to resume trading, although the struggling crypto lender issued a statement on Monday, saying that stabilizing operations is a “process that will take time.”
- Celsius did not immediately respond to Axios’ request for comment on Tuesday.
Armstrong’s grievance with Celsius comes from a pair of crypto-collateralized loans, denominated in bitcoin and ethereum (ETH), that he took out through the platform.
- “Tuesday night, my business partner said, ‘We need to talk about ETH lending. We can’t use the money in our account because it’s frozen,’” Armstrong told Axios.
- With choppy markets and plummeting crypto values, debtors are being urged to top up their accounts or risk having their assets seized and accounts closed by lenders.
- “I wake up with Celsius sweats,” Armstrong told Axios in the days leading up to the eventual liquidation of his ETH loan. “I think, ‘By the time you open your eyes, you’re going to be liquidated.'”
- Armstrong says his account totaled about $3 million before the liquidation.
an armstrong thing could did, he says, was to use coins he had in his account to settle his ETH loan. But first, he would have had to convert them into coins of the loan value.
- And because Celsius had suspended swaps and transfers, the only way for him to respond to a margin call was to send to the lender more moneysaid Armstrong.
- “Whether you’re able to pay the loan to value internally or are naive enough to send more money, you’ll probably never get your money back,” he said.
- Armstrong plans to sue Celsius, but has fall the idea of bringing a class action lawsuit against the company.
Big picture: For some, the multi-billion dollar question is whether Celsius will file for bankruptcy – and if so, how type of the bankruptcy proceedings which he will pursue. That’s according to Robert Honeywell, a bankrupt partner at K&L Gates.
- The type of bankruptcy proceeding would be determined by what the business is, which is ill-defined in an industry that remains unregulated.
The context: Celsius reportedly hired restructuring lawyers last week.
- “You’re a stockbroker, commodity trader, banker, or insurer. If you’re not one of them, you’re everything else,” Honeywell joked.
The plot: “The customer wants their crypto account balance to receive priority treatment,” Honeywell said. But priority treatment is given only to specialized cases — for example, when a customer has a securities Account.
- “We also have an odd situation where some crypto companies might be considered offering securities, but others considered currency,” Honeywell added.
At the end of the line : “Not your keys, not your coins” is the lesson for Celsius customers. It is better to keep your coins in your own wallet rather than in an exchange or platform.