The ‘Bachelorette’ contestant’s firefighter father has locked his retirement with bankrupt crypto lender – AOL | Vette Leader

A photo illustration of the Celsius Network logo seen on a smartphone screen. (Rafael Henrique/SOPA Images/LightRocket via Getty Images)

Chapman Shallcross had been burned before. Shallcross, father of the current “Bachelorette” contestant Zach Shallcrossspent 34 years in the fire service and retired from his job as fire chief for the city of Orange after health problems caught up with him in 2020. The elder Shallcross thinks he’s a hard-working worker, but when his reality star son introduced him to the world of cryptocurrencies, he was quickly intrigued by the technology’s potential.

Now, the elder Shallcross is one of nearly 1.7 million people around the world whose assets have been frozen on the Celsius Network, a cryptocurrency lender that vowed to be safer than a bank. Celsius froze more than one $4 billion in assets on June 12th. A month later, it filed for Chapter 11 bankruptcy protection, making it one of the few crypto companies to implode during the recent market crash.

Many in the cryptosphere refer to it the downfall by Celsius, Voyager and Three Arrows Capital as the “Lehman Brothers moment” for the industry, a nod to the investment bank that collapsed during the 2008 subprime mortgage crisis. Before it crashed, the subprime mortgage industry was worth $1.3 trillion. Today’s The crypto industry is worth a lot more – and is not nearly as regulated.

“I thought [Celsius] would be a solid place to put my cryptocurrency; and it turns out it’s not, and it’s terrifying,” Shallcross told the Times.

Doctors, actors, crypto enthusiasts, working-class folks like Shallcross, and even Canada’s second-largest pension fund, Caisse de Dépôt et Placement du Québec, which has around $150 million, are also caught up in the Celsius chaos included in Celsius.

Shallcross started investing in cryptocurrencies in 2018. He started slowly, but after retiring in 2020, he withdrew all his retirement savings from his state-owned CalPers account and bought Ethereum and Cardano, two cryptocurrencies. Shallcross initially held its crypto on the BlockFi exchange, but transferred it to the Celsius Network in December 2021, which promised a yield program with returns of up to 17%. He planned for the investment to remain in his Celsius account for about five to seven years before taking it out. But on June 12, he suddenly discovered it was him cannot withdraw money from his Celsius account. He has more than $400,000 locked in his Celsius account.

“I just want access to my crypto,” Shallcross said on the phone on the way home to Anaheim from a camping trip in Big Bear. “I want to be able to pull it off [Celsius]which, by the way, Celsius promised.”

Celsius was founded in 2017 by Alex Mashinsky. Wearing a black t-shirt with “Banks are not your friends‘, Mashinky hosted weekly ask-me-anything sessions with Celsius customers. He claimed that Celsius is able to generate high returns for customers by operating in a manner similar to a bank. Users could deposit various cryptocurrencies or the US dollar in Celsius. Celsius then lent the assets to financial institutions willing to pay high interest rates for the short-term loans. This was dubbed the “earn service” for Celsius users.

Celsius urged international users to take the interest payment in the form of their own cryptocurrency, the CEL token. for a higher return. CEL is not legally traded in the US In the terms and conditions for the Celsius network, users did not simply deposit their funds as they would in a bank. Technically, they loaned digital assets to Celsius, essentially turning user deposits into unsecured loans. buried in it Terms of UseCelsius stated that in the event of the company going bankrupt, users’ assets “may not be recoverable” and users “may not have any legal remedy or rights.”

James Murrow also found Mashinsky convincing. Murrow and his wife Hui have locked more than $60,000 in their joint accounts. The two recently relocated from the Bay Area to Oklahoma due to the high cost of living in California. Murrow’s biggest concern about Celsius is that the “little guys” will once again be footing the bill.

“Alex Mashinsky really tells a great story,” Murrow told the Times. “Unfortunately for him, he lied. He lied a lot. It turns out there were all sorts of risky investments [Celsius was] to do with our money.”

The California Department of Financial Protection and Innovation also took note of Mashinky’s actions. in one refrain and refrain from ordering published Aug. 8, DFPI states that more than 48,000 Californians with assets worth $650 million are involved in Celsius’s frozen assets. DFPI ordered Celsius to cease offering securities to California residents while making “misstatements as to material facts or omissions of material facts.”

The command also claims that Mashinky himself deceived users. “Mashinsky has argued on numerous occasions that even in the worst case scenario, Earn Rewards investors would be able to withdraw their investments in a timely manner and not incur losses on their investments, and has further assured that it is even safe to invest assets at Celsius.” to be deposited in the days leading up to the company’s June 12, 2022 decision to suspend customer withdrawals,” the order said.

When asked to respond to Murrow’s comment and the DFPI order, Celsius directed the Times to their blog and Twitter accountwhich both users are advising on the status of Celsius’ bankruptcy proceedings.

There is little the government can do to combat shaky financial advice. A variety of YouTubers, TV pundits, and Twitter users offer all kinds of financial advice 24/7. Laws regulating crypto firms like Celsius are rather piecemeal and mostly left to the states. The FDIC, which insures bank deposits up to $250,000, offers no such protection for investments in crypto institutions.

Celsius is currently examined in Alabama, Kentucky, New Jersey, Texas and Washington. New Jersey issued a cease-and-desist order against Celsius, effective November 1, 2021, alleging that the company sold unregistered securities in violation of New Jersey law. Celsius is headquartered in New Jersey, where at least one class-action lawsuit has been filed against the company. State Atty in New York. General Letitia James appeals to New Yorkers who believe they have been duped by Mashinsky or other cryptocurrency platforms.

On August 3rd A bill was introduced in the Senate that would bring crypto regulation under the Commodities Futures Trading Commission. The much better funded Securities and Exchange Commission currently conducts most crypto enforcement. The SEC is not commenting on the existence or non-existence of possible investigations, a spokesman told The Times.

Shallcross is torn about the possibility of regulation for the crypto industry. He likes and believes in the decentralized, anti-government aspects of cryptocurrencies and blockchain technologies. He has no plans to sell his crypto even if he could get it back. He’s in it for the long haul, he said. In the cryptosphere he is “HODLing” or “holding on for dear life”.

“I think decentralization is good and I think blockchain technology and cryptocurrency can be great,” Shallcross said. “But when you get slapped in the face with the loss of your entire retirement savings, you can’t help but say, ‘Hey, I definitely wish there was some kind of regulation that would have prevented this.'”

This story originally appeared in the Los Angeles Times.

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