Celsius CEO Alex Mashinsky reportedly took over the control of trades before bankruptcy

  • Sources said that Celsius CEO Alex Mashinsky took trading matters into his hands while ignoring experts’ advice, additionally, he blocked the sale of GBTC shares back in September 2021 using his powers.
  • As per reports, Celsius has underreported its debt by more than 50 percent.

Troubled crypto lender Celsius Networks has been in deep waters after it filed for Chapter 11 bankruptcy last month. In a recent revelation to Financial Times, unidentified sources said that earlier this year in January, Celsius CEO Alex Mashinsky took control of the platform’s trading strategy.

As per the sources, Mashinsky dictated personal individual trades by overruling the suggestions of financial advisors. The sources said that Mashinsky authorized the sale of “hundreds of millions of dollars” worth of Bitcoins that belonged to users. He eventually bought all those Bitcoins 24 hours later but at a loss of $50 million.

Mashinsky’s actions led to frequent clashes between him and Frank van Etten, the then-chief investment officer of Celsius. Reportedly, the Celsius CEO had a very high conviction over Fed’s interest rate hikes. He also wanted the staff to start cutting risks before the Federal Reserve meeting. However, until March 2022, the Fed didn’t confirm that it would be raising interest rates.

Related: Did Celsius users give up legal rights to their crypto? Lawyers claim so!

Despite the crypto market had volatility back then, the prices of the tokens didn’t plummet as expected. Thus, Celsius has to conduct a loss-making trade. Besides, the sources also said that Celsius CEO Alex Mashinsky used his power to prevent the sale of GBTC shares and other investments tied to the cryptocurrency.

The company held a total of 11 million GBTC shares that were worth around $400 million back in September 2021. As per sources, Mashinsky proposed solutions to reduce losses which he rejected. But later in April 2022, the company ended up selling them at a loss anywhere between $100 million to $125 million.

Celsius considers New Financing Proposal

It has been a month since crypto lender Celsius filed for Chapter 11 bankruptcy. As per reports, Celsius is working on a new restructuring process while considering different financing proposals. Joshua Sussberg of Kirkland & Ellis, the lawyer representing Celsius said that the company is considering financing packages of “various shapes and sizes”.

Celsius said that it plans to raise additional money to avoid liquidation. For the month of August, the company needs additional liquidity worth $66.4 million. By October this year, the company’s balance can reportedly turn negative. Next week, the Celsius team shall be meeting the unsecured creditors’ committee.

The troubled crypto lender added that the matters covered in the latest hearing included “our intention to see our customers capture any and all value associated with the recent rise of crypto”.

Another report from Coin Report also stated that Celsius has underreported its debt. As per reports, the current debt of Celsius currently stands at $2.85 while the company reported only $1.2 billion in its filing. As per Coin Report, Celsius’ net liabilities stood at $6.6 billion while its total assets under management stand at $3.8 billion.

About Author

Bhushan is a FinTech enthusiast and holds a good flair for understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In his free time, he reads thriller fictions novels and sometimes explores his culinary skills.

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