The Celsius High-Yield Deposit Scam: Promising Guaranteed 17% Returns While Misappropriating Deposits on the Path to Bankruptcy

Who Gets Targeted

Most victims were retail cryptocurrency holders around the world, including middle-class investors who converted retirement savings or down payments for homes into Bitcoin or stablecoins and deposited them on the platform; crypto novices drawn by high-yield pitches in weekly livestreams; and overseas trend-following users who neither understood English legal terms nor questioned their blind trust in the founder's personal image. Their common psychological weakness was coveting fixed annualized returns far above bank interest rates while mistakenly believing the principal was safe. When the bear market arrived and they tried to withdraw, their assets were frozen, and in the end they could only recover at an extremely low ratio in bankruptcy proceedings. Many suffered heavy losses and pursued claims for years without result.

骗局怎么运作

• Step 1: Creating a guru to attract users: The founder hosted regular weekly livestream Q&As, repeatedly touted high yields, claimed the platform lent users' deposited coins to institutions to earn an interest spread and then shared rebates, with annualized returns reaching the teens, dismissed traditional bank deposits as worthless, and built trust through personal charisma and frequent on-camera appearances.
• Step 2: Attracting deposits with high interest: The platform designed products that offered fixed high yields for deposits of Bitcoin, Ethereum, and stablecoins, and issued its own token CEL to encourage users to receive interest in the token and qualify for higher-tier yields, thereby locking users into not withdrawing for the long term. At its peak, deposits reached tens of billions of dollars.
• Step 3: Putting on a fair-seeming facade: It publicly claimed that only strictly regulated institutional investors could borrow users' assets and that all loans were fully collateralized, creating the illusion that it was safer than a bank; in reality, U.S. regulators later found that these statements contained numerous misrepresentations.
• Step 4: Secret misappropriation: Users' assets were actually put into high-risk proprietary trading, uncollateralized lending, and liquidity mining, while the founder and internal traders also manipulated the price of their own token in the market to maintain the illusion of prosperity, all without users' knowledge.
• Step 5: Collapse and cutting ties: In June 2022, a market decline triggered a wave of redemptions, and the platform suddenly froze all withdrawals. A month later, it filed for bankruptcy protection. Billions of dollars belonging to users were locked in the bankruptcy proceedings, where they could only recover at a discount to liquidation value, while the founder had already made tens of millions of dollars by selling tokens and other means.

红旗信号（看到这些快跑）

• 🚩 Promising fixed annualized returns far above the market while claiming the principal is safe and risk-free, a clear mismatch between return and risk
• 🚩 The founder engages in frequent livestream sales-style marketing and builds trust through personal charisma rather than audit reports and regulatory licenses
• 🚩 Encouraging users to receive interest in the platform's own token to obtain higher yield tiers, creating a self-reinforcing price bubble
• 🚩 Unable to clearly explain where the funds are specifically invested, vague about borrower qualifications and collateral, and refusing to disclose a complete balance sheet
• 🚩 User assets are unilaterally custodied by the platform, private keys are not in users' hands, and the platform can freeze withdrawals at any time
• 🚩 The platform is registered in a lightly regulated jurisdiction, is not covered by deposit insurance, and if problems arise users can only go through bankruptcy liquidation proceedings

真实案例

• In July 2023, the U.S. Department of Justice charged the founder of Celsius, accusing him of defrauding platform users and manipulating the price of the CEL token, involving billions of dollars in user assets; media outlets such as 36Kr reported the lawsuit, and the founder was subsequently arrested.
• In December 2024, the founder pleaded guilty in a New York federal court to commodities fraud and securities fraud, admitting he had misled users; in May 2025 he was sentenced to 12 years in prison, and later he filed a legal challenge to his sentence, to which prosecutors publicly responded that the motion was baseless.
• In 2026, the U.S. FTC reached a $6 million settlement with a co-founder of Celsius, and that same year the CFTC issued a permanent trading and registration ban against the founder, constituting a lifetime market ban; in addition, public on-chain data showed that an associated wallet still sold off more than 17,000 ETH after the bankruptcy proceedings, sparking ongoing controversy. (Source: https://license.aiying.cc/us/celsius-co-founders-ftc-6m-settlement-2026/)
• In May 2025, the U.S. District Court for the Southern District of New York sentenced the principal defendant of the crypto lending platform Celsius Network to 12 years in prison. The court found that he falsely claimed customer deposits were safe and reliable, misappropriated assets for high-risk speculation, and manipulated token prices to profit $48 million, causing more than 100,000 creditors to lose $4.7 billion. The principal defendant was also ordered to forfeit $48 million in assets. (Source: https://www.coindesk.com/policy/2025/05/08/celsius-founder-alex-mashinsky-sentenced-to-12-years-in-prison-for-fraud)
• In July 2026, the U.S. Federal Trade Commission reached a settlement in the case involving the crypto lending platform Celsius Network's misappropriation of customer assets. The platform founder and two other principal defendants paid a total of $16.5 million and were permanently prohibited from engaging in businesses such as accepting customer deposits and buying or selling cryptocurrencies; the company involved had previously agreed to a $4.7 billion judgment. (Source: https://www.ftc.gov/legal-library/browse/cases-proceedings/222-3137-celsius-network-inc-et-al-ftc-v)

Official Stance

• In July 2023, the U.S. Department of Justice announced charges against the founder of Celsius, accusing him of defrauding users of billions of dollars and manipulating the price of the CEL token
• In July 2023, the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission simultaneously sued Celsius and its founder, accusing them of unregistered securities offerings, fraud, and market manipulation
• In February 2024, the U.S. Federal Trade Commission announced a permanent injunction with Celsius, prohibiting it from again handling consumer deposit-type crypto assets
• In 2026, the U.S. Commodity Futures Trading Commission issued a consent order imposing a permanent trading and registration ban on the founder, constituting a lifetime market ban

How to Protect Yourself

• ✅ Stay vigilant against any crypto wealth-management platform that promises fixed high yields, and remember that returns several times above normal market levels necessarily correspond to the risk of total loss of principal
• ✅ Only use platforms that are properly regulated and disclose audit reports and proof of reserves, and verify whether they hold financial business licenses
• ✅ For large crypto holdings, insist on self-custody of private keys in cold wallet storage, and do not entrust your entire net worth to a single yield-generating platform
• ✅ When you hear a founder promoting guaranteed principal and high yields through livestreams and personal charisma, first check the country's regulator's enforcement and warning lists
• ✅ If you notice signals such as delayed withdrawals, evasive customer service, and frequent changes to terms, immediately stop adding funds and withdraw as soon as possible
• ✅ Investors who have already suffered losses should promptly register their claims through the court's bankruptcy creditor claim process and keep deposit and withdrawal records as evidence