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As scammers Target Customers, Prime Trust Provides Funding to Celsius

As if a protracted bankruptcy wasn’t enough, court records reveal a new twist in the saga of the defunct cryptocurrency lender Celsius: con artists pretending to be attorneys involved in its Chapter 11 proceedings.

The scam attempts are Celsius’ newest problem after it stopped withdrawals and other associated client activity in July due to “extreme market conditions.”

At the time, the business stated in a blog post that “our ultimate objective is stabilizing liquidity and resuming withdrawals, [swaps], and transfers between accounts as swiftly as possible.” We still have a lot of work to do while we weigh our alternatives; this process will take some time, and there may be delays.

In its most recent setback, Celsius’s attorneys claimed in court documents this week that several unnamed potential criminals have been contacting its creditors under the guise of Kirkland & Ellis lawyers. The attempts, which were primarily conducted via email, appear to have been made in an effort to convince clients whose accounts have been locked for months to provide personal information in an effort to access their accounts.

The emails had links to collaborative spreadsheets where recipients were instructed to contribute their private data. The news of the alleged fraud attempts was originally revealed by the trade journal Law360. At least in the view of the hackers, it’s unclear if any of those attempts were effective.

However, all is not lost for Celsius. A planned agreement with Prime Trust, the cryptocurrency custodian that consented to return roughly $17 million of its assets to the bankrupt company, is progressing.

According to court papers seen by Blockworks, that was just the beginning. Prime Trust also owes Celsius 7.4 bitcoins, 1,145.5 CEL tokens, 248.5 ether, and almost $364,000 worth of the stablecoin USDC, according to a revised settlement plan.

The assets wouldn’t cover Celsius’ role, which is deep in hundreds of millions of dollars, even if all parties and the bankruptcy court agree to the deal. However, every little bit helps to a small extent in recovering money for customers who have since become creditors, who Celsius has always stated are its top priority.

A spokesman for Prime Trust declined to comment, citing the ongoing dispute, while a spokesperson for Celsius did not respond to a request for comment.

Visitors to Celsius’ website are informed of the impending bankruptcy and are given a link to another website created especially to spread information about the proceedings via a pop-up window that appears in the interim.

However, the careers page for the now-defunct digital asset lenders still states that Celsius has “open positions in every area” and is “expanding rapidly.”

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