Merchant Loses Whole EIDL After Attempting to Earn High Yield On It

It’s a tale of Covid EIDL relief gone wrong. A small business owner in Colorado Springs, CO is begging for his funds back after taking the entire lump sum of his EIDL funds ($525,000) and depositing them with a high-yield non-FDIC insured cryptocurrency tech company. The tech company, Celsius, declared bankruptcy less than two months later, yanking the merchant’s EIDL funds with it. Celsius was not a bank, the arrangement not a true deposit account, and the funds not FDIC-insured.

In a letter submitted by the merchant to the bankruptcy court, he says that he deposited the funds there to “earn an APY to help pay back the 3.9% on the loan…” He further added that he believed his account to be safe because of the site’s Terms of Use.

“The funds in my Celsius Custodial account are not mine, they are the US Governments and I my entire business is secured and backed by these funds,” he wrote. “If they are not returned, my business would go bankrupt, my 15 employees would be let go, and 14 years of my life’s work lost and at the age of 49 years old, I would have to start over with nothing.”

Prior to the bankruptcy, Alex Mashinsky, Celsius’ CEO, oft touted the phrase: “banks are not your friend.”