Beleaguered cryptocurrency lender Celsius (CRYPTO: CEL) lacks proper asset and liability tracking and attempted to cover up false statements made publicly by its Chief Executive Officer Alex Mashinsky.

That's according to independent examiner Shoba Pillay, who informed the U.S Bankruptcy Court for the Southern District of New York on Tuesday of her findings in a 689-page report.

What Happened: Comments made by Mashinsky during Q&A sessions with customers were edited by employees to remove inaccurate information, Pillay maintains, alleging that Celsius conducted its business in a starkly different manner than how it marketed itself in every key respect behind the scenes.

See Also: South Korea Takes Steps To Track Crypto Transactions, Combat Money Laundering

Despite presenting an optimistic financial picture to its customers, the company was struggling with a liquidity crunch, employees internally referred to it as a "sinking ship."

The report also reveals that Celsius didn't disclose information on purchases of its token CEL and used customer assets as collateral for loans to cover holes in its balance sheet.

Why It Matters: Despite assuring customers that their crypto assets would be returned in the event of bankruptcy, the terms of service stated that all rights of ownership had been transferred to the company.

The report also found that Celsius spent at least $558 million buying its own token and concealed from customers the extent to which it was making the market for CEL.

Pillay also touched upon the tax and risk management issues faced by Celsius and said the company faced significant tax compliance deficiencies and had not employed anyone to handle tax until 2021.

The Bitcoin (CRYPTO: BTC) mining operations of Celsius also had unpaid utility bills and owed taxes.

The firm's risk management function and written risk policies were also lacking until 2021 when a team was hired to implement them.

Despite this, the executive team delayed the proposals and the firm never fully implemented a robust risk management policy before filing for bankruptcy.

She said Celsius attempted to shield its token, CEL, from any decline in value that was caused by its CEO's sale of substantial amounts of his personal CEL holdings. 

The report noted that between 2018 and Celsius' bankruptcy filing, Mashinsky sold a minimum of 25 million CEL tokens, earning at least $68.7 million from these sales.

Co-founder S. Daniel Leon was also reported to have sold a minimum of 2.6 million CEL tokens, realizing a minimum of $9.74 million.

Pillay was appointed in September to investigate the business operations of Celsius, including whether different types of user accounts were commingled.

A 302-page interim report was filed in November, highlighting the liquidity crunch and shortfall of funds in the company's Custody accounts, as well as the lack of accounting and operational controls.

Next: FTX Trading Seeks To Remove Turkish Subsidiaries From US Bankruptcy Case Amid Fear Of Non-Compliance