Celsius CEO Accused of Making Trading Calls Leading to its Bankruptcy

Alex Mashinsky, the CEO and founder of now bankrupt crypto lender Celsius in a bid to protect the firm from anticipated decline, personally took charge of trading strategy at the firm. This is according to a Financial Times report.

Mashinsky took charge of affairs in January after reports that the US Federal Reserve was going to hike prices.

At one time, he ordered the sale of bitcoins (BTC) worth hundreds of millions of dollars without double checking Celsius’ information on its holdings. He later bought the same back the next day at a loss.

All of his decisions during this period were solely based on his knowledge and intuition with no input from experts. He overruled inputs from experts during this period.

The platform realized a $50 million trading loss in January though it’s not clear how much of this loss can be traced to Mashinsky.

The CEO’s autocratic actions caused friction between himself and Frank Van Etten, the company’s former Chief Investment Officer. Etten joined Celsius in September 2021 and left February this year after his many disagreements with Mashinsky’s approach.

Mashinsky’s Actions led to Celsius woes

According to the report, Celsius incurred huge undisclosed losses although Mashinsky has repeatedly said in public, that it did not trade customers’ assets. 

One of such undisclosed losses is that suffered in its investment in Grayscale Bitcoin Trust (GBTC). It reportedly lost about $125 million in total.

Mashinsky allegedly prevented the sales of the firm’s GBTC shares holdings at a 15% discount worth $400 million back in September. He had hoped that the discount might narrow only for the firm to give up its position in April at a 25% discount.

All of these bad choices culminated in the firm’s filing for bankruptcy in July after it halted withdrawals on its platform in June. A recent court filing on Sunday suggests the crypto lender could be out of funds in October. 

Recently, blockchain payment firm Ripple Labs signaled interest in acquiring assets of the troubled lender. With a valuation of over $10 billion as of December 2019, Ripple’s interest in Celsius’ assets bodes a possible solution to the lender’s financial woes