Why is the NBS on the list of cryptocurrency investors?

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The National Bank of Serbia, together with several other institutions and companies from our country, is on the list of the American law firm Stretto, which is managing the bankruptcy of Celsius Network LLC. It caused an avalanche of comments on social networks, given that Celsius was dealing with cryptocurrencies, and that the list includes, among others, those who lost money by investing in Celsius. The National Bank of Serbia has denied that it has ever invested any funds in cryptocurrencies, nor that it plans to do so, and the interlocutors of the N1 portal state that the aforementioned list is not exclusively investors, but companies to which Celsius paid for services rendered, such as airlines, as well as supervisory bodies which the law firm believed should be informed about the bankruptcy proceedings.

The American-Israeli company Celsius Network LLC operated on the principle of a crypto-bank – it received deposits in cryptocurrencies, on which it paid interest, and approved loans in cryptocurrencies at a low interest rate. She had numerous clients all over the world who invested in this way – billions of dollars. And then the company went bankrupt and the list of its creditors “stretched” to as many as 14,500 pages. However, in recent days, the public has been interested in another list, also related to this company – the one on 6,088 pages that includes individual Serbian institutions and companies.

Namely, on the list, which includes investors in Celsius, there are also the National Bank of Serbia, the Securities Commission, the Commission for the Protection of Competition, as well as Hotel Metropol, the National Consumer Organization of Serbia NOPS, the companies Air Srbija, Alba invest, Terra Panonica from Mokrin and startup Tenderly from Belgrade.

The central bank points out that the NBS can invest foreign exchange funds exclusively in safe assets – “which obviously virtual currencies are not”.

“The National Bank of Serbia has not invested, does not invest and does not plan to invest funds from foreign exchange reserves, nor other funds at its disposal in virtual currencies or other forms of crypto-assets”, the NBS points out.

Lawyer Željko Motika explains to portal N1 that the list is not exclusively of investors, that is, creditors of Celsius.

“Based on the available information, I believe that NBS is not investing in cryptocurrencies. “It is possible that they provided some kind of service or in some other way found themselves on that list, but they are definitely not creditors”, Željka Motika points out.

Ivan Bjelajac, who led the team that developed the software for the American Celsius in Serbia for the N1 portal, emphasizes that they were exclusively engaged in technical development.

“We were not involved in the investment, nor in the legal and technical issues of Celsius”, says Bjelajac and explains that the aforementioned list includes investors, companies that Celsius did not pay for the services provided, and – supervisory bodies that the law firm managing the bankruptcy considered they should be notified.

Rescue attempt

Lawyer Željka Motika, who, among other things, deals with issues in the field of digital property, points out that she saw the mentioned list already this summer.

“Then I reviewed all the available information. It is about the fact that the reorganization of Celsius in the USA has been initiated. So, it’s about trying to save the company from going bankrupt,” she says.

When that procedure is initiated, he adds, there are precisely specified elements and information that such a proposal for reorganization should contain.

“It is information on assets and liabilities, income, expenses, contracts and leases that have not expired, as well as a statement on the financial situation”, explains Željka Motika.

Then, she says, she also looked at the aforementioned document in which, among others, the NBS and other institutions and companies from Serbia appear.

“Celsius, by the way, was present in Serbia in such a way that developers from our country provided it with development services. My impression is that the National Bank of Serbia certainly did not invest in cryptocurrencies, but perhaps someone from the bank asked for some document and that is why it was on the list. Also, by searching for creditors on the website of the law firm Stretto, we get the information that there are none from Serbia, while under the search criterion ‘bank’, only three information comes out, and none of them are NBS. Based on all that information, I believe that the NBS did not invest in crypto assets, it is possible that it provided some kind of service or in some other way found itself on that list, but it is definitely not a creditor”, our interlocutor points out.

Ivan Bjelajac managed the team at the company MVP Workshop, which from September 2017 to June 2021 worked on the development of the software used by Celsius.

“Celsius bought from us the team that worked on the development of that software and then opened an office in Belgrade and continued to independently lead the development of its product in terms of technology”, says Bjelajac for the N1 portal. 

“We were only engaged in technical development”

He points out that there are not only creditors on the list of more than 6,000 pages.

“Celsius, as a company that entered Chapter 11 bankruptcy protection in the USA, published a 14,500-page list of all creditors this summer. As far as I have seen, there is no National Bank of Serbia on it. That list was on the website of the court in the USA, but was later ‘taken down’ because all the personal data of the investors were listed. This list of about 6,000 pages includes a list of creditors from whom Celsius bought something but has not yet paid. In this way, for example, Air Serbia could be on the list if they bought tickets from it, but did not transfer the money for payment. “Thirdly, the list includes American supervisory bodies that the law firm Stretto believed should be informed about the course of the proceedings against Celsius”, Bjelajac points out.

Personally, he says, he does not know why the NBS was on that list.

“Did they have funds in Celsius – I don’t believe it.” Nor are they on the list of creditors, and I don’t see why they would invest in cryptocurrencies. “Maybe there was a payment to the NBS or they were added as a potential supervisory authority”, says Bjelajac. 

His team, he says, was engaged in technical development.

We were not involved in investment and legal and technical issues”, he points out.

Celsius, he adds, definitely lost the user’s money.

“The money was lost through reckless risky investments, which they admitted at the first hearing.” By the way, that trial can be followed publicly on the court’s website. Celsius is an American-Israeli company registered in New Jersey, the first such project that was in a situation of losing user money and entering bankruptcy. I would not be able to say in which direction it will go and how they will be regulated or punished, nor whether it will have criminal or misdemeanor consequences. What happened in Serbia is 90 percent of their technological development, which no one has ever hidden. I am personally proud of what a team of 200 people did to develop that project. I managed the company where that team was located while we were developing it for them as a separate company, and then I helped them take over that team, and then it was managed by the Celsius team and we parted ways in that sense”, says our interlocutor.

The company Celsius Network Europe doo Belgrade, he points out, has always played a role only in product development, technical support and design.

“Not at all in investments.” All these events took place in America, and the bankruptcy process is still being conducted there”, Ivan Bjelajac points out.

On what principle did Celsius work?

Celsius is a company that, according to Ivan Bjelajc, “allowed you to borrow money on the basis of placing your cryptocurrency in crypto-collateral – as a cash loan for collateral (means of security). Similar to a cash loan with a deposit.”

“Celsius turns that money around and pays you interest if you keep the money with them, and if you want a loan, you just ‘lock’ the money and use the loan at one percent annual interest. Billions of dollars of users around the world were in circulation at Celsius. It is the largest single such company in the world that has been operating for five years”, Bjelajac points out.

At some point, a little less than a year ago, Celsius lost a significant amount of its users.

“They deceived the users by claiming that they were making risk-free investments, while they were very risky under the assumption of a large profit – for what reasons and what the sanctions will be, the court in the USA will decid”, concludes Bjelajac.

NBS: We explained it two months ago

The National Bank of Serbia immediately announced itself on social networks, as soon as the story about the Celsius list “spinned” again in the public eye.

“The NBS has not invested, does not invest and does not plan to invest foreign exchange reserves or other assets at its disposal in virtual currencies or other forms of crypto assets. In the last ten years, the National Bank of Serbia has continuously warned the public and citizens of the huge risks of investing in bitcoin and other cryptocurrencies and the possibility that citizens and business entities may lose their invested funds in whole or in part, primarily due to the extreme instability of the value of these assets and their connection with fraudulent and other illegal activities, which is strikingly evidenced by the events on the crypto-property market since the beginning of this year”, the central bank points out.

The NBS points out that in this regard, “the false news that was spread through social networks that the National Bank of Serbia allegedly placed and lost large funds through the Celsius Network LLC platform, is not only malicious, it is clearly incorrect and it clearly speaks of an unscrupulous violation of elementary of ethical norms when it comes to behavior in public, it is also contrary to common sense and indicates that those who fabricated it do not even minimally know the legal framework of operations of the Central Bank of the Republic of Serbia, or they count on the fact that their followers are not familiar with that framework”.

“Namely, the Law on the National Bank of Serbia already stipulates that the National Bank of Serbia can invest foreign currency funds only in safe assets, which apparently virtual currencies are not, while the Foreign Exchange Reserve Management Strategy, which was adopted by the Council of Governors, explicitly stated in which all forms of assets the NBS can invest (deposits with the safest banks in the world, government securities of the most developed countries, gold and effective foreign currency). In addition, anyone can inspect the state and structure of the foreign exchange reserves of the National Bank of Serbia by inspecting the financial statements and other data verified by the external auditor. We do not want to believe that the main reason for spreading fake news is that someone is bothered by the fact that the National Bank of Serbia raised the level of foreign exchange reserves to 16.5 billion euros through responsible operations and that, among other things.

The Central Bank also reminds that more than two months ago it “explained to the public that it appeared in a document published on the website of the American law firm Stretto.”

“And that document refers to the bankruptcy proceedings of the American company Celsius Network LLC and other companies that provided services related to virtual currencies, apparently as a supervisory authority in the field of digital assets in the Republic of Serbia (together with the Securities Commission), and not as a creditor, and considering that, we assume, the users of the services of the mentioned company were also from the Republic of Serbia. “Until today, nobody on behalf of the mentioned companies has approached the National Bank of Serbia on behalf of those companies in connection with the bankruptcy procedure”, concludes the NBS, N1 writes.