713
views

Mashinsky Withdrew $10 Million From Celsius Prior to Bankruptcy: Report

Alex Mashinsky – founder of Celsius Network – reportedly withdrew $10 million from the struggling lending platform weeks before its bankruptcy. 

Under U.S law, he may be forced to return those funds for the benefit of his company’s creditors. 

Mashinsky’s Last Minute Withdrawal

Mashinsky’s hefty withdrawal came in late May – at a time when Celsius users were already withdrawing their assets in droves. Fear overtook customers as crypto markets slid in Q2, and worries over Celsius’ financial health grew larger. 

“In mid to late May 2022, Mr Mashinsky withdrew a percentage of cryptocurrency in his account, much of which was used to pay state and federal taxes,” a spokesperson for Mashinksy told the Financial Times. “In the nine months leading up to that withdrawal, he consistently deposited cryptocurrency in amounts that totalled what he withdrew in May.”

Celsius CEO Alex Mashinsky Steps Down From Bankrupt Crypto Firm (CEL) - Bloomberg
Alex Mashinsky. Source: Bloomberg

People familiar with the matter say that Mashinsky withdrew $10 million of crypto. However, Mashinsky’s spokesperson said that $44 million of Mashinsky’s funds remained frozen with Celsius even after his withdrawals. 

The transactions, he said, were voluntarily disclosed by Mashinksy official unsecured creditors committee (UCC) in Celsius’ bankruptcy proceedings. Details of these transactions are to be submitted by Celsius in court over the coming days as part of its disclosure process. 

“He continues to be committed to working with and uniting the community around a recovery plan that will maximise coin and liquidity for all,” they added.

Celsius: Behind the Curtain

Celsius filed for bankruptcy in July shortly after reclaiming the collateral it had locked away within various DeFi protocols. The filings unveiled a $1.2 billion hole in its balance sheet – though some reports suggest its debt is as high as $3 billion. 

Celsius had gained popularity as a source of high-yield and low-interest rate loans on cryptocurrency. The firm offered as much as 18% APY on some assets – rates regulators at the SEC have explicitly warned are “too good to be true.”

The company – alongside other crypto lenders that froze their users’ assets this year –  now faces a slew of lawsuits from such regulators. For example, the Vermont state financial regulator claimed last month that Celsius has secretly been insolvent since 2019. 

Bitcoin live price
Btc
Bitcoin
$17.015,36
price
0.79716%
price change
BUY NOW

In January, Mashinsky reportedly led a series of bad trades on shaky information that contributed to the company’s downfall in Q2. Last week, Mashinsky resigned as CEO of Celsius, saying his presence had become an “increasing distraction” at the company.  

Stay up to date with our latest articles