Celsius CEO Alex Mashinsky Withdrew $10 Million Ahead of Bankruptcy

In July 2022, crypto lender Celsius Network plunged into bankruptcy amid massive withdrawals taking on the platform. As the company was spiraling towards bankruptcy, it froze customer accounts as well.

However, the latest report from the Financial Times shows that Celsius founder Alex Mashinsky withdrew $10 million from the crypto lender just weeks before customer accounts. Mashinsky withdrew the crypto in May 2022 when customers were pulling their assets in large numbers on concerns about Celsius’ financial health.

The withdrawal revelations could intensify scrutiny on Mashinsky who resigned last week on September 27. It also raises questions that whether Mashinsky knew that Celsius won’t be able to return their customers their assets.

Details of these transactions by Mashinksy will be submitted to the court in the coming days. This could be a broader disclosure by Celsius of its financial affairs. But a spokesperson said that Mashinksy and his family still have $44 million worth of crypto frozen in the company. He further added:

“In mid to late May 2022, Mr Mashinsky withdrew a percentage of cryptocurrency in his account, much of which was used to pay state and federal taxes. In the nine months leading up to that withdrawal, he consistently deposited cryptocurrency in amounts that totalled what he withdrew in May. He continues to be committed to working with and uniting the community around a recovery plan that will maximise coin and liquidity for all”.

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What’s Next for Mashinsky?

As per the FT report, Mashinsky faces the prospect of being forced to return the $10 million he withdrew from Celsius Networks. As per U.S. law, payments by a company within 90 days of filing bankruptcy can be clawed back.

Another person familiar with the matter said that $8 million of the withdrawn sum went to paying taxes on income the assets had generated on Celsius. The rest of $2 million came in the form of $CEL, the native tokens of Celsius Networks. The person also added that the withdrawal was pre-planned and linked to Mashinsky’s estate planning.

Back in August, there were also allegations on the Celsius founder for using customers’ funds to take wild bets.

Bhushan is a FinTech enthusiast and holds a good flair in 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 free time he reads thriller fictions novels and sometimes explore his culinary skills.

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