Celsius Top Dogs Withdrew $17M Before Bankruptcy Proceedings

A new court document reveals that former Celsius CEO Alex Mashinsky, former CSO Daniel Leon, and CTO Nuke Goldstein withdrew their crypto before Celsius paused withdrawals in June 2022.

Update 6 Oct. 19:00UTC: According to updated reports, CTO, Nuke Goldstein sent funds to other Celsius wallets, and did not receive the funds directly.

A Statement of Financial Affairs submitted on Oct. 5, 2022, to the Bankruptcy Court for the Southern District reveals that the three executives withdrew $42 million worth of Ethereum (ETH), Bitcoin (BTC), Circle (USDC), and Celsius’s native CEL token.

Mashinsky’s mafia exposed

According to the statement, former CEO Alex Mashinsky withdrew $10 million worth of crypto from his custody account in May 2022, first reported by the Financial Times on Oct. 3, 2022. Between May 27 and May 31, Leon allegedly withdrew $11 million, including $4 million worth of CEL, from his account, while Goldstein allegedly withdrew $13 million.

Following the statement’s revelations, Goldstein came in for some flack on crypto Twitter since “Nuke” is a term used colloquially in crypto to describe a hefty and sudden price correction caused by a holder dumping a cryptocurrency.

Venture capital guru Mike Dudas, who heads up Ventures at Paxos, was a prominent participant in the ensuing Twitter roast.

Another tweet by CelsiusLoans, an unofficial Twitter account representing Celsius’s unsecured creditors hoping for proceeds from its ongoing bankruptcy proceedings, listed Goldstein’s apparent withdrawals.

Goldstein hit back, saying that funds were moved rather than withdrawn:

After the story broke, Simon Dixon, CEO of investment platform BnkToTheFuture.com, expressed sympathy for Celsius investors who had more faith in the platform than the founders. Goldstein responded by saying that divested creditors misinterpreted the transactions and that he was “working to get some context to the community and media.”

Celsius’s Official Committee of Unsecured Creditors (UCC) called for calm amidst calls for the executives to return the withdrawn funds, saying there is no regulatory precedent for such an action.

The committee is a legal entity formed to represent Celsius’s creditors after the company filed for Chapter 11 bankruptcy in July 2022. The company raised its profile by offering yields as high as 18% on crypto deposits but made risky investments to follow through on that promise. As it stands, the company owes customers around $4.7 billion.

Following the bankruptcy hearing, Celsius creditors gathered on social media groups and channels such as CelsiusLoans to plot the recovery of their frozen crypto. According to a recent court filing, the company’s assets will be auctioned off on Nov. 1, 2022.

The UCC is hosting a Twitter spaces event on Oct. 7, 2022, to update creditors on the latest court proceedings.

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