"I think someone would have to be frankly insane to trust Celsius with their assets at this point," former compliance director Timothy Cradle says.
A former Celsius Network employee has accused the company of being "sloppiness and mismanagement."
Timothy Cradle used to work as the firm's director of compliance and financial crimes — and claims Celsius was hectic, chaotic and disorganized.
Cradle claims Celsius executives actively manipulated the value of CEL tokens — allegations that have also been made in separate lawsuits.
The crypto lender suddenly halted withdrawals for customers more than a month ago, and users are still waiting for information on when they'll get crypto back.
Celsius has now commenced bankruptcy proceedings — revealing that it has a $1.2 billion black hole in its finances.
Cradle has cast doubt over whether the company's ambitions to undergo restructuring and rise from the ashes will succeed.
Predicting that customers will quickly empty their accounts and never come back when withdrawals resume, he said:
"I think someone would have to be frankly insane to trust Celsius with their assets at this point."
Coinbase Speaks Out
In other developments, Coinbase has insisted that it has no exposure to a number of firms that have been dragged down by crypto contagion.
The exchange says the multiple blows dealt over recent weeks "are likely to be a major inflection point for the industry" — but executives argue that the woes facing Celsius, Three Arrows Capital and Voyager Digital were "foreseeable."
According to Coinbase, these firms suffered from insufficient risk controls — and the issues relate to credit, not crypto, adding:
"Many of these firms were overleveraged with short-term liabilities mismatched against longer duration illiquid assets … We believe these market participants were caught up in the frenzy of a crypto bull market and forgot the basics of risk management. Unhedged bets, huge investments in the Terra ecosystem, and massive leverage provided to and deployed by 3AC meant that risk was too high and too concentrated."