The final examiner’s report on Celsius’s bankruptcy proceedings is a 476-page report that details how the firm’s operations were akin to a Ponzi scheme. Here are some of the key takeaways that confirm some of the worst allegations:

1. Celsius’s Problems Started in 2020

The examiner found that Celsius’s problems did not start in 2022, but rather dated back to at least 2020 when the firm used customer assets to fund operational expenses and rewards. Even during the massive bull run in 2021, Celsius recorded a pre-tax loss of $811 million.

The firm appears to have never been profitable throughout its course of operations. In fact, it was effectively insolvent in mid-2021 with stablecoin liabilities of $2 billion in August of that year, and a significant BTC and ETH deficit by mid-2022.

2. Mashinsky Cashed Out $68M

Despite making repeated assertions that he was not a seller of the platform’s native CEL token, Celsius CEO Alex Mashinsky directly sold or swapped 25.1 million CEL for $68.7 million.

3. Many Celsius Insiders Knew It Was Illegal

Through the course of 2020 and 2021, Celsius took out loans using the BTC and ETH that was deposited by customers. When the market collapsed in 2022, Celsius expended BTC and ETH to repay outstanding loans and unwind DeFi positions, so that they could acquire more crypto to deliver to withdrawing customers.

In April, Celsius’s Coin Deployment Specialist Dean Tappen described the firm’s use of customer stablecoins in this regard as “very ponzi like.”

“[w]e are talking about becoming a regulated entity and we are doing something possibly illegal and definitely not compliant,” said Celsius’s former Chief Financial Officer Harumi Urata-Thompson.

“If anyone ever found out our position and how much our founders took in USD could be a very very bad look . . . We are using users USDC to pay for employees worthless CEL . . . All because the company is the one inflating the price to get the valuations to be able to sell back to the company,” said another Celsius employee on Slack.

4. Customer Funds Were Used to Prop Up $CEL

Celsius spent at least $558 million buying its own token on the market – most of which was using funds borrowed from customer deposits.

The firm made active efforts to artificially inflate the price of CEL by placing “resting” orders to buy the token, which would be triggered if its value fell below a certain amount. It also sold CEL in private OTC transactions, offsetting these with purchases in public markets in a strategy the firm referred to as “OTC Flywheel.”

5. Celsius Employees Withdrew Their Assets as It Collapsed

While Mashinsky was the largest holder of CEL, several other top managers made significant amounts by selling the token. Celsius CTO Nuke Goldstein sold $2.8 million and CSO Daniel Leon sold $9.74 million.

Internal documents show that after LUNA’s collapse last May, Mashinsky withdrew assets from the platform.

6. The Rewards Rate Policy Was Made Up

Celsius did not have a formal rewards rate determination policy, but instead made decisions on an ad-hoc basis. These rates were largely driven by Mashinsky’s concern that all customers would leave if its rates dropped below those of their competitors.

Although an investment committee was supposedly in place to determine these rates, executives of the committee told the examiner that Mashinsky made the final call, and his receptiveness to alternative viewpoints “waivered depending on his mood and who was in the room.”

The firm also did not generate enough yield to meet these reward rates on assets it offered to customers.

7. Mashinsky Wanted to Double Down on FTX Last January

Mashinsky made a trip to the Bahamas in January 2022, where he visited FTX’s Sam Bankman-Fried and Alameda Research’s Caroline Ellison.

In his interview with the examiner, Mashinsky claims he came away completely distrustful of FTX and said he wanted to unwind any exposure to the platform. However, as Celsius’ Chief Credit Officer Brian Strauss recalls, Mashinsky came back wanting to double down on the crypto exchange, and the Risk Team had to dissuade him.

In early 2022, Celsius increased exposure to FTX by keeping assets on the exchange and borrowing stablecoins from them. By April 2022, Celsius had borrowed $1.5 billion in stablecoins and had over $2.5 billion in crypto on FTX.