Celsius’ ex-CEO withdrew $10 million weeks before the company’s customer accounts were frozen

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Last Updated on October 3, 2022 by Bitfinsider

According to the Financial Times, citing unnamed sources, Alex Mashinsky, the embattled founder and former CEO of Celsius Network, removed $10 million from the now-bankrupt crypto lender weeks before it ceased customer withdrawals in June.

According to the Financial Times, Mashinsky, who resigned as CEO on September 27 (Eastern time), withdrew the cryptocurrency in May. The collapse of the Terra ecosystem, which saw $60 billion in value evaporate that month, was roiling crypto markets at the time. Celsius is expected to submit details about Mashinsky’s transactions to the court in the coming days as part of a larger financial disclosure.

According to a Mashinsky spokesperson, the entrepreneur disclosed to an unsecured creditors committee (UCC) in the bankruptcy proceedings that he and his family had $44 million in cryptocurrency frozen with Celsius following the withdrawal. According to the Financial Times, Mashinsky “‘withdrew a percentage of cryptocurrency in his account, much of which was used to pay state and federal taxes.”

Celsius halted withdrawals, swaps, and transfers on its platform in June, citing “extreme market conditions,” before filing for chapter 11 bankruptcy protection in the United States one month later. Southern District of New York Bankruptcy Court Celsius disclosed a $1.2 billion hole in its balance sheet in a subsequent court filing. Celsius had $4.3 billion in assets and $5.5 billion in liabilities, according to the document.

Celsius stated in a statement at the time of the initial bankruptcy filing that “without a pause, the acceleration of withdrawals would have allowed certain customers – those who were first to act – to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before receiving a recovery.”

Mashinsky then called the decision “right for our community and company,” adding that “we will see this as a defining moment in Celsius’ history, where acting with resolve and confidence served the community and strengthened the company’s future.”

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