Celsius got huge deposits based on unsustainable yield guarantees (17% I think), they took that crypto and used it as collateral on defi protocols, then took the loans they got and gave it to funds like 3ac, who made money on leveraged carry trades that eventually worked up to Luna which was offering an absurd 20% apy through anchor which was completely unsustainable but basically kept afloat by Luna itself dumping money into it.

Everyone could see they were running out of money which would eventually cause them to blow up, which caused people to eventually jump ship, which caused Luna to implode because it was fundamentally flawed but people were either too greedy or didn't do their due diligence to avoid it, which caused all of their assets to vaporize as they tried to defend their stablecoin peg. With 3ac insolvent, nobody that lent to them could get their capital back, which meant they could no longer repay their defi loans which caused them to be liquidated as prices dropped and they couldn't post additional collateral. With their funds locked or liquidated, they had nothing to return to depositors who wanted their stuff back.

To be charitable you could say they weren't outright scamming people, but anyone with a nose should have smelled the enormous stench of death coming from the entire thing.

Good old fashioned counter party risk.

It seems "legit" because both orgs already believed in the "Power of Crypto".

Like if we both, a priori, believe the earth is flat, we'd seem "legit" to each other.