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Celsius suffered widely publicized insolvency issues as crypto prices crashed, then filed for Chapter 11 bankruptcy in July.
Mashinsky allegedly traded Celsius funds
Alex Mashinsky weighed in on Celsius Network’s business decisions in the months leading up to the company’s collapse on a Tuesday FinancialTimes report claimed.
According to the report, Celsius’ CEO took control of the company’s business strategy in January ahead of a Federal Reserve meeting. According to unnamed sources familiar with the matter, Mashinsky feared that crypto prices would suffer if the Fed raised interest rates and decided to write off senior traders with decades of experience. In one instance, the sources say, he ordered the crypto lender’s business team to sell hundreds of millions of dollars worth of Bitcoin, and the company bought back the funds the next day at a loss. The report alleges that Celsius lost $50 million from trading in January alone.
The sources also said that Mashinsky had multiple run-ins with the company’s former chief investment officer, Frank van Etten, over business decisions and his interference in the company’s business strategy. Van Etten left Celsius in February.
The Financial Times report comes after months of turmoil in Celsius. In June, it emerged that the crypto lender was facing an insolvency crisis when it halted customer withdrawals. The company filed for Chapter 11 bankruptcy a month later, revealing a $1.2 billion hole in its balance sheet stemming from lost bets on Terra, Lido’s staked Ethereum token, Grayscale’s GBTC fund and loans to now-defunct hedge fund Three Arrows Capital.
In the fallout from the Celsius implosion, the company faced a number of controversies with Mashinsky at the center of the drama. A former executive alleged that the company manipulated the price of its CEL token before its collapse, and the company came under fire when its recovery plan revealed that it hoped a bull market would honor its debts. According to Celsius’s terms of service, customers gave the company the right to “use, sell, pledge and remortgage” their assets when they deposited their funds. This means that these clients may never see their funds again.
Disclosure: At the time of writing this article, the author of this article owned ETH and several other cryptocurrencies.