Celsius Network founder Alex Mashinski withdrew $10 million from cryptocurrency lenders just weeks before the company froze customer accounts headed for bankruptcy, according to people familiar with the matter. .
Mashinsky’s crypto withdrawals in May came at a time when customers were withdrawing large amounts of assets from the company, frightened by turmoil and concerns in the cryptocurrency market. Celsiusfinancial health.
Celsius froze withdrawals on June 12, making savings inaccessible to hundreds of thousands of retail investors.Company filing for bankruptcy There was a $1.2 billion hole in the balance sheet in July.
The business peaked last year with $25 billion worth of crypto assets deposited by customers lured by the as high as 18% interest rate offered by Celsius. Cryptocurrency.
Revelation of the withdrawal would intensify Mashinski’s scrutiny. resigned as CEO On Tuesday, it raises questions about when Celsius learned that it could not return the client’s assets.
Details of the Mashinski transaction are expected to be filed in court by Celsius in the coming days as part of the company’s wider disclosure of financial information.
A Mashinsky spokesperson said he and his family still have $44 million in crypto assets frozen in Celsius after the withdrawal, and voluntarily filed the deal with the Unsecured Creditors Commission (UCC) in bankruptcy proceedings. publicly disclosed.
In mid-to-late May 2022, Mr. Mashinsky withdrew some of the cryptocurrency from his account, much of which was used to pay state and federal taxes. For months, he consistently deposited cryptocurrencies with the total amount he withdrew in May,” said a spokesperson.
He remains committed to working with and uniting the community on a recovery plan that maximizes coin and liquidity for everyone, they added.
Mashinsky, 56, co-founded Celsius in 2017 and has been the face of the company, appearing in a weekly video address on YouTube and promoting a message of financial liberation from the banking industry.
In late 2021, Celsius’ valuation will reach $3 billion after raising $600 million in equity investments from US investment firm WestCap and Canada’s second largest pension fund Caisse de dpt et placement du Qubec .
Despite Mashinsky’s public bullishness, the company struggled behind the scenes with weak internal systems for managing assets, sometimes paying customers more interest than they could get from loans.
Celsius also suffered a series of investment losses in 2021 and 2022 that contributed to the company’s downfall, but were not disclosed to clients.Last month, Vermont financial regulators Celsius claims bankruptcy May 13th this year.
The company saw a huge outflow of assets in May as the crypto market was rocked by the collapse of terraUSD and Luna, two interconnected cryptocurrencies. caused failure.
Days before Celsius froze withdrawals, the crypto lender reassured customers that it had sufficient reserves and declared that it was moving full speed ahead.
Former telecom operator Mashinsky faces the possibility of being forced to return $10 million he withdrew from Celsius. Under U.S. law, payments made by the company 90 days before his bankruptcy (or one year for him in the case of insider remittances) may be recovered to the benefit of all creditors.
About $8 million of the assets Mr. Mashinski withdrew were used to fund taxes on the income the assets generated at Celsius, according to a person familiar with the matter.
The remaining $2 million was denominated in Celsius native CEL tokens. The withdrawal was pre-planned and related to Mashinski’s estate plans, the official added.
Mashinsky is the largest shareholder in Celsius and says he is one of the largest bankruptcy creditors. He apologized to his clients in his resignation last week, saying he was “extremely sorry for the difficult financial situation members of our community are facing.”
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