Crypto Biz: Was Celsius just a Ponzi after all?

Crypto lender Celsius was one of the biggest casualties of the bear market. After halting withdrawals for months due to “extreme market conditions,” the distressed lender officially filed for Chapter 11 bankruptcy on July 13. Now, the federal judge overseeing the bankruptcy proceedings has ordered the case examiner to determine whether the company was operating like a Ponzi scheme. Disgruntled Celsius customers have made a strong case that the company’s business operations met the legal definition of a Ponzi. After all, it didn’t take long for Celsius’ business model to crumble under volatility. This is one case we should all be monitoring very closely.

In this week’s Crypto Biz, we once again revisit the Celsius debacle. We also explore Binance’s investment in Elon Musk’s Twitter deal and MicroStrategy’s renewed commitment to Bitcoin.

Judge orders probe to investigate whether Celsius was a Ponzi

In finance, a Ponzi scheme is a fraudulent investment practice where returns are generated and paid out to existing investors using money from later investors. Allegations of Ponzi have now been levied at Celsius by its former customers, who say the firm used the assets of new users to pay yields and facilitate withdrawals of existing users. These allegations are being taken seriously by federal judge Martin Glenn, who ordered the case examiner and committee of Celsius creditors to probe the matter closely. Glenn was quoted as saying he was “shocked” when he saw redactions made by Celsius related to an Oct. 11 motion that outlines employee bonuses. This one could get explosive.

Twitter monetization and free speech drove Binance’s $500M injection — CZ

Crypto exchange Binance was one of several firms to help finance Elon Musk’s $44 billion acquisition of Twitter. Binance doled out $500 million to help fund the initiative, with CEO Changpeng “CZ” Zhao touting Twitter’s monetization potential and eventual transition to Web3 as core reasons behind the investment. Of course, CZ expects to be paid back one day — even though Twitter has only occasionally turned a profit since it went public in 2013. I wouldn’t hold your breath, CZ.

A small contribution to the cause. https://t.co/xD9XZxOWfL

— CZ Binance (@cz_binance) May 5, 2022

MicroStrategy CEO reiterates ‘long term’ Bitcoin play in Q3 earnings

Business intelligence firm MicroStrategy has no plans to unwind its massive exposure to Bitcoin and will continue investing in the digital asset for the long term. That commitment didn’t come from Michael Saylor, who stepped down as CEO in August to focus on Bitcoin (BTC) evangelism, but from new company head Phong Le. “We have not sold any Bitcoin to date,” Le said during MicroStrategy’s Q3 earnings call. “To reiterate our strategy, we seek to acquire and hold Bitcoin for the long term. And we do not currently plan to engage in sales of Bitcoin.” MicroStrategy reported a net loss of $27.1 million for the quarter.

Moneygram to enable users to buy, sell and hold cryptocurrency via mobile app

Fresh news on the adoption front: digital payments company MoneyGram has announced that nearly all of its United States customers can buy, sell and hold cryptocurrencies through its mobile app. The company will initially support Bitcoin, Ether (ETH) and Litecoin (LTC) transactions, with plans to add more crypto assets in 2023. MoneyGram’s global audience is over 150 million people. If crypto adoption takes off in the United States, we could see similar support being launched worldwide. However, that will depend on regulations, the company said.

Before you go: Why did Dogecoin pump this week?

The cryptocurrency market rallied sharply to end October, with popular memecoin Dogecoin (DOGE) surging 150% on the back of Elon Musk’s purchase of Twitter. Are we still in a bear market or have the tides turned? In this week’s Market Report, I sat down with Marcel Pechman to discuss how Musk’s Twitter purchase could impact crypto and whether we are nearing a definitive bottom for this cycle. You can watch the full replay below (spoiler alert: I’m not very optimistic):