Ex-CEO Alex Mashinsky Cashed Out $10M From Celsius Weeks Before Bankruptcy Filing

Former Celsius Network CEO Alex Mashinsky reportedly removed millions of dollars from the company before blocking users from withdrawing funds and subsequently filing for Chapter 11 bankruptcy in July.

Mashinsky Allegedly Withdrew $10M

The founder and ex-CEO of Celsius Alex Mashinsky withdrew a staggering $10 million from the platform just weeks before the firm declared bankruptcy, a Monday Financial Times report has claimed.

According to the report, Mashinsky made the hefty withdrawal mid-May before the June 12 freeze of customer accounts. According to unnamed sources familiar with the matter, the $10M withdrawal was “pre-planned and was linked to Mashinsky’s estate planning”.

Once a popular lender with over $24 billion in assets under management, Celsius’s insolvency crisis memorably started in June amid a crypto market-wide downturn. The company filed for Chapter 11 bankruptcy protection a month later, revealing a $1.2 billion hole in its balance sheet originating from lost bets on Terra, Lido’s staked Ethereum token, Grayscale’s GBTC fund, and loans to the now-defunct hedge fund Three Arrows Capital.

The sources also said that Mashinsky would withdraw small amounts of crypto to pay state and federal taxes in the lead-up to the $10 million withdrawal, and he “consistently deposited cryptocurrency in amounts that totaled what he withdrew in May.”

Mashinsky resigned as Celsius’ CEO on September 27, noting he was “very sorry” about the financial struggles the company’s customers are facing in the fallout from its implosion earlier this year.

Mashinsky’s withdrawal notably raised many eyebrows about whether he knew beforehand that the crypto lending firm would be freezing user accounts. Nonetheless, a Celsius representative told the FT that the former CEO and his family still had around $44 million worth of cryptocurrencies frozen on the platform.

Celsius is expected to present details about Mashinsky’s transactions to the court in a few days’ time as part of a broader financial disclosure by the crypto lender.

On September 30, William K. Harrington, a U.S. Trustee reporting to the Department of Justice, objected to Celsius’ plans to reopen withdrawals, arguing that there are still expansive investigations to be done before funds are unlocked.