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Incident · Crypto lender failure · Jun – Jul 2022

Celsius Network: what happened and what it teaches

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Mitey says: Not a story to scare you. A checklist of what to look for next time.

A crypto lender that marketed itself as the safest place for your crypto froze withdrawals in June 2022 with about US$4.7 billion of customer assets inaccessible; its founder was later sentenced to 12 years for fraud.

What happened

Celsius paid ‘rewards’ on deposits through its Earn program, which deployed customer assets to generate returns. Its founder repeatedly misrepresented the safety, profitability and risks of depositing, according to the US Department of Justice.

Executives spent hundreds of millions of dollars buying Celsius’s own CEL token, at times with customer deposits, to prop up its price.

Celsius halted withdrawals on June 12, 2022 and filed for bankruptcy on July 13, 2022. Founder Alex Mashinsky pleaded guilty to commodities and securities fraud and was sentenced to 12 years on May 8, 2025.

Scale, from official records

  • About US$25 billion in assets at its peak (fall 2021) (US DOJ, 2025-05-08)
  • US$4.7 billion in customer assets inaccessible when withdrawals halted (US DOJ, 2025-05-08)

The Canadian angle

The CSA named Celsius among the platform insolvencies that led it to strengthen Canadian platform undertakings in February 2023, including bans on pledging or rehypothecating client crypto.

What broke

Customer deposits lent out and rehypothecated for yield, misrepresentations about safety and liquidity, and price support of its own token; a liquidity run ended in a freeze.

What a user could have checked

  • Where the yield came from and whether deposits were lent out.
  • Whether the platform's own token was holding up its finances.
  • Whether the platform was registered in Canada: CSA terms now bar pledging Canadian clients' crypto.

Recovery

Celsius said it began distributing more than US$3 billion to creditors on January 31, 2024 (company’s own figure). A per-claim recovery rate was not confirmed on an official page.

Sources

Education only. Nothing on this page is financial, investment, tax or legal advice, or a recommendation to buy, sell, stake, lend or borrow any crypto-asset. Crypto-assets can lose some or all of their value and are not covered by CDIC. Canadian rules change: check the dated sources above and talk to a qualified professional about your situation. Full disclaimer.