Celsius CEO Withdrew dollar10 Million Before Company Entered Bankruptcy
Categories: Crypto News
Celsius CEO Withdrew$10 Million Before Company Entered Bankruptcy
Mashinsky isalleged to have made the withdrawals in May, following the collapse of stablecoinissuer Terra, with fears of contagion in the cryptocurrency marketcausing panicked withdrawals among Celsius own customers. Around a monthlater, on June 12, Celsius then froze customer withdrawals, before filing forchapter 11 bankruptcy in July with a hole in its finances worth around $1.2billion.
Theallegations of Mashinsky withdrawing funds comes days after he stepped down asCelsius CEO, amid ongoing bankruptcy proceedings. They will likelyheighten scrutiny of his actions prior to the collapse, and raise questions asto what he and other senior figures at the lender knew or understood regardingCelsius precarious financial situation.
CelsiusCEO Mashinsky Withdrew $10 Million
It appearsthat Mashinsky isn't denying withdrawing the $10 million, although aspokesperson for the former CEO is stating that he had previously made depositsequalling that amount.
"In midto late May 2022, Mr Mashinsky withdrew a percentage of cryptocurrency in hisaccount, much of which was used to pay state and federal taxes. In the ninemonths leading up to that withdrawal, he consistently deposited cryptocurrencyin amounts that totalled what he withdrew in May," said the spokesperson.
Mashinsky'sspokesperson also affirms that the former CEO is "committed to workingwith and uniting the community around a recovery plan" that will offercompensation to the maximum number of Celsius customers. As of writing, thesecustomers are owed some $4.7 billion, with many of them reporting that theydeposited substantial sums with Celsius prior to its bankruptcy.
Combinedwith the new allegations against Mashinsky, this creates a picture of a companythat may have knowingly misled its customers, against a backdrop of havingspeculated recklessly with said customers' savings.
BankruptcyProceedings
WhileCelsius' failure is often associated with the collapse of Terra and ThreeArrows Capital (not to mention Voyager Digital), its bankruptcy appears to havelargely been the result of dangerous investments.
It hadoffered yields of up to 17% to its customers, but it appears that it fundedsuch promises via risky bets in the DeFi market. It deposited around $534million with KeyFi between August 2020 and April 2021, for instance, yetwhereas its deposits with KeyFi grew to a value $1.14 billion by the end ofthis period, they would have been worth around $1.49 billion if Celsius hadsimply held the assets itself.
At the sametime, it also suffered from hacks and technical mishaps, with the lender beingexposed to the $120 million BadgerDAO hack in December 2021.
As ofwriting, bankruptcy proceedings are still underway, with reports suggestingthat most Celsius customers may be deemed unsecured creditors. This will putthem last in line to receive compensation, meaning that the money lost by thelender's customers may be lost for good.