Celsius $750m insurance claims are fraud, says lawyer seeking EU crypto superfund

Rick Steves

“It is an intentional deception in aid of a billion-dollar securities offering.”

Jonathan Levy, a London-based lawyer representing clients with millions of dollars tied up in Celsius accounts, is calling the Celsius insurance claims a case of fraud in aid of an unregistered securities offering.

He pointed out that Celsius is not the only culprit as other crypto asset companies make similar claims but these have not failed, “yet” said Dr. Levy, who warned investors they are unlikely to be insured.

“The insurance does not exist. Celsius’ own term of use stated there was no insurance in the boilerplate print. Yet we have Celsius and GK8 claiming insurance in bold print. It is an intentional deception in aid of a billion-dollar securities offering”, said Jonathan Levy.

Celsius insurance claims ‘a sham’

As Celsius Network collapsed and restricted account holders from withdrawing billions of dollars in funds, between June 5, 2022 and July 8, 2022, the firm added a claim to its homepage touting the existence of $750 million insurance for its assets.

Celsius declared bankruptcy on July 13, 2022, but there was no further mention of the $750 million in insurance claimed through GK8 and Fireblocks.

While Celsius claimed it had insurance through Fireblocks, the latter’s compliance officer has come forward saying the firm is not in the insurance or custodial business, it provides software to its clients and any insurance is through a policy of which Fireblocks is the beneficiary for data breeches.

As to GK8, a Celsius subsidiary, the firm claims $500 million in insurance through UK insurer AON, but it was never integrated into Celsius operations, according to Celsius CEO Alex Mashinsky. Dr. Jonathan Levy believes the $500 million in insurance through AON, which is under investigation, very likely will not hold up to the light of day.

Calling it ‘a sham’, the attorney reminded the crypto industry that using a single data breach policy in favor of a custodian or service provider to allegedly extend coverage to multiple clients and assets far beyond the policy limits and coverage is deceptive and could even give rise to further liability for securities fraud, as might be the case with Celsius.

Dr. Levy seeks EU crypto fund for victims

Dr. Levy noted that, on August 8, California issued a cease and desist order on an unregulated securities offering by Celsius and praised the state’s DFS for its quick action.

“California of course is correct, Celsius Network was not a bank, it was an unregistered securities offering. It is very likely the SEC will soon get involved given the size and scope of losses involved. Celsius Network, its officer and other players better have liability insurance ready, real insurance, and not the illusory insurance with which they tried to deceive investors.”

In the meantime, and on behalf of a consortium of victims who have suffered losses exceeding €10 billion, Dr. Jonathan Levy is seeking the establishment of a crypto industry funded Superfund to be launched by the European Union.

The European Union Parliament Petitions Committee is now considering the Petition which proposes the implementation of an unnoticeable .0001 cent per € insurance fund fee on crypto asset transactions that would provide for a victim Superfund.

The attorney believes such a superfund would give crypto assets the much-needed insurance from fraud and deception losses and massive blow outs like Celsius Network.

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