A Celsius Network customer has been hit with a $67,000 tax bill for funds lost by the bankrupt lender. Doug Stringer had more than $2 million tied to the lender when he froze withdrawals. Customers remain subject to charges on the high interest income promised by the bankrupt lender. Something is loading.
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A Celsius Network client has been hit with a $67,000 tax bill over funds lost in the crypto lender’s bankruptcy last year, as tax filings evoke dark memories and new complications for investors. harmed investors.
reported that San Antonio, Texas client Doug Stringer invested more than $2.8 million in Celsius Network before it filed for bankruptcy last July.
He lost all his money on the platform when it halted withdrawals last June, a month before his Chapter 11 filing.
But because the Inland Revenue Service (IRS) taxes interest income via Form 1099, Stringer and other Celsius investors find themselves forced to pay levies on funds that are still hypothetically locked in inaccessible accounts.
“I put all my eggs in one basket,” Stringer, whose investment was worth $10 million at one point, told . “And I’m devastated.”
The 63-year-old, who works in private equity, said it had postponed his retirement plans.
A Ponzi investigation into Celsius has revealed that the bankrupt lender misled customers about the nature of its business and used customer funds to underpin the value of its native token in a bid to maintain its promise of returns at high interest rates.
Due to a widespread crash in crypto valuations over the past year, investors are unlikely to face capital gains taxes.
But this sheds more light on the loan programs offered by crypto companies.
The “staking” program, which promised high interest returns if investors locked up funds and came under scrutiny from the SEC, means interest charges have been high.
Roman Smolkin, a 43-year-old software designer, told he was drawn to Celsius by the double-digit returns it promised investors on some deals, and piled more than $200,000 into the exchange. .
Now those high interest promises have landed him an $8,000 tax bill.
“Honestly, I’m freaking out,” Smolkin told . “It’s beyond frustrating – I’ve lost everything that sparked interest to begin with.”
The IRS told it was aware of the issue, but declined to comment. An IRS spokesperson told Insider that was still the case Thursday morning.