Celsius founder files petition for compensation fund

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Celsius founder files petition for compensation fund

A petition to create a compensation fund is getting a lot of steam following recent scandals at the Celsius Network.

The petition organizer, Jonathan Levy, said the EU must create a fund that is paid for by taxing transactions to provide restitution for victims of criptocurrency crime.

While Celsius is not under criminal investigation, Levy alleged that the company is guilty of criminal wrongdoing.

The lending and borrowing platform suspended withdrawals on June 13 due to extreme market conditions. Weeks before, the company was insolvent, rumors were floating around social media - a claim that CEO Alex Mashinsky denied at the time.

It later emerged that Celsius was engaged in risky high leveraged trading with users funds and had come untuck during the market downturn.

Since July 1, on-chain data shows the company paid $183 million of its collateralized debt to Maker. Over the past few days, Celsius has paid down other debts, according to Twitter.

Co-founder of Onchain Captial Ran Neuner asked the Twitterverse if anyone knew where Celsius was getting the money.

Details of Celsius's financial situation are not known as a private company. These active measures give users with locked up funds a chance of being able to use the platform.

Levy submitted a compensation fund petition to respond to the losses caused by criminality. He had previously been lobbying for the European Commission on behalf of his clients regarding matters relating to the OneCoin scandal.

The petition states that victims of cryptocurrencies cannot seek restitution via usual methods - like legal proceedings in national courts, criminal complaints to national authorities, bank transfers, credit card reversals, due to the multijurisdictional nature of cryptocurrencies.

A compensation fund is necessary to help victims of criptocurrency crime and to fulfill the EU's obligations in overseeing the digital asset market.

At this stage, the happenings at Celsius are not under criminal investigation. The consensus is that the problems at the company were the result of mismanagement rather than a deliberate attempt to defraud investors.

In an email sent to CryptoSlate, Levy claimed that Celsius had been complicit in covering up risky rehypothecation practices for more than a year.

It is alleged that both parties misled users on insurance by issuing confusing and conflicting reports, giving customers false sense of security.

It does not have an insurance plan, according to Celsius. Fireblocks does provide insurance cover for digital assets held by Celsius in cold storage.

When deployed for yield generation by Celsius, those cryptoassets are not covered for losses.

A network of individuals and companies who have lost €10 billion, including a client with several million euros frozen by Celsius, Dr. Levy proposes an industry-funded superfund to compensate victims of criptocurrency crime.

The fund would be paid for by implementing an unnoticeable 0001 cent per transaction. The proposal is feasible considering daily asset volume has been as high as €2 trillion recently, according to Dr. Levy. The last 24 hours saw $64.2 billion in volume, according to CoinMarketCap.

It is not clear whether the proposal is intended for transactions conducted within the EU. If the proposal is implemented, there may be a shortfall between expectations and actual taxation fee.

The response hasn't been received, but Levy was contacted for clarification.