It should be noted that the attitude towards Celsius platform within the cryptocurrency community is mostly negative, and Alex Mashinsky, the founder, is considered a fraudster. In the winter, it became known that the platform was operating as a pyramid scheme long before it went bankrupt. In other words, its management had been using new users’ money to make payments to old customers.

Such conclusions were drawn by Shoba Pillai, an independent expert. He made them after a thorough examination of the platform’s documentation and conversations with Celsius representatives – including Maszynski himself.

A little earlier, a lawsuit was filed against Maszynski. According to New York Attorney General Leticia James, Alex misled investors by promising them the arrival of long-awaited financial freedom. What is particularly noteworthy here is that Celsius’ management was actively making money from the sale of its own CEL token – and this continued even after the platform was blocked in the summer of 2022.

All in all, the customer losses have been impressive. As such, Maszynski will have to answer for his actions.

Why Celsius went bankrupt

On the eve, The Block’s reporters got their hands on documents revealing Celsius’ dealings shortly before bankruptcy. According to sources, the company’s management had approached Goldman Sachs and Abu Dhabi-based fund ADQ with a proposal to finance a project called Celsius Web Services. It was suggested that CWS could become “the universal suite of Web3 tools of the future”.

Former Celsius CEO Alex Maszynski, who retired in September 2022, personally led the creation of CWS. He wanted to raise a billion dollars for the initiative. In the end, Maszynski was never able to turn the idea into reality – already in June, Celsius froze withdrawals from its platform and filed for bankruptcy a month later.

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The CWS project itself was unlikely to be successful and was probably created literally “in a bummer” to distract market participants from the real problems at Celsius. Yet even a few months before the bankruptcy, the company’s problems were disastrous. As can be deduced from the documents, Maszynski had managed to raise a total of $750 million from external investors up to that point, but the money quickly ran out.

CWS did not interest potential clients in either Goldman Sachs or ADQ. Eventually, the company still had to declare bankruptcy, and now Celsius owes several billion dollars to its customers and creditors.

Notably, Celsius offered Goldman Sachs and ADQ slightly different development plans for CWS. Especially interesting was the proposal for the latter organisation: Maszynski wanted to create a central bank digital currency (CBDC), while engaging the Polygon platform. The platform later told reporters in an interview that it was not aware of such initiatives.

The UAE central bank was supposed to act as the “sole issuer” of the digital dirham, with Celsius and Polygon supposedly providing the infrastructure for its launch. Although investors rejected Maszynski’s proposed project, he could have foreseen such a development. Still, the UAE unveiled its CBDC development strategy in March 2023, and the first phase of the digital dirham project is scheduled to be completed by mid-2024.


We think the failure to fund Alex Maszynski's new project is good news for the blockchain industry. As has become clear since the collapse of Celsius, Alex's platform was operated as a pyramid scheme. Accordingly, raising additional capital could only have delayed the death of the project, as the company was out of the question. So we can only be glad that more people did not fall victim to the scammer. Hopefully Maszynski will still be held responsible for the financial damage caused to his own users.