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He believes that the crypto lending platform, which sparked his interest after the collapse of the stablecoin of TerraUSD luna (UST), did not emerge about its weaknesses and misleading investors.

"It is unclear what happened to Celsius," Klippsten told CoinDesk TV's "First Mover" program on Tuesday, the day after Celsius' announcement that it would suspend withdrawals due to "very serious market conditions."

Celsius' problems have led to widespread fears about the future of crypto and contributed to a four-day rise in prices to two-year low levels.

Klippsten said Celsius first sparked his interest last May, and that his concerns about his model and what he saw as false promises have grown.

On Friday, May 13, days after the news of Terra's fall, Celsius announced that he had withdrawn half a billion dollars 'worth of users' money from Terra's Anchor Protocol, news spread across the cryptocurrency industry.

"That was really amazing," Klippsten said. "That the risk management team even bothered to play with the obvious Ponzi scheme like Luna and moreover, to get us out a day before the crash."

This is not the first time Celsius has met in conflict. In December last year, it lost about $ 55 million, or about $ 896 (bitcoin), after BadgerDAO, a non-profit organization, was robbed of more than $ 120 million.

Klippsten added that Celsius was keeping the user's parking bills in decentralized finance (DeFi) protocols meaningless, dangerous and inefficient. "It's a big, big, big red flag."

In April, Celsius banned new transfers by unauthorized investors in their U.S. territory, setting a limit on who can add new assets and win prizes. About five months earlier, the crypto currency company had to replace its former CFO, Yaron Shalem, after Shalem's arrest "for fraudulent activities in the field of cryptocurrencies."

Business Model Problem

Celsius' sales have been misleading, added Klippsten. "They make it sound like a better bank, and they make it sound like a high-yield savings account," he said.

A peer-to-peer platform aims to simplify crypto lending, and it attracts users by repaying 80% of revenue to users with prizes, while the company uses the remaining 20% ​​to support project expansion.

Celsius users are likely to be unsecured lenders, Klippsten notes. “You are an unsecured debtor, and they can do whatever they want with your money back, actually trading you like a hedge fund. You have no rights to your coins, ”he said.

However Klippsten said crypto borrowing models do not have problems by nature. For those who have to look for a crop, "there will be a spectrum, and there will be a lot of obvious ones," he said, adding that those well-managed forums may have "strong risk management, and frankly, low yields. You have to choose that."

Celsius suspensions on withdrawals and transfers, as well as the previous terraUSD debacle could be a wake-up call, allowing investors to see the lies of a risk-free, high-yield product.

The Celsius CEL token recently traded for about 64 cents, according to CoinMarketCap data, setting the company's market capitalization of more than $ 161 million.

Source: yahoo

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