Frontrunning The Fallout

Market Meditations | October 3, 2022

By now, the Celsius saga seems to be old news. Despite that, as hearings occur, we learn of news that is relevant to understanding the fall of the Celsius network. Last week, founder and former CEO, Alex Mashinsky, resigned. We are now learning that he removed $10 million from the lender weeks before Celsius halted withdrawals. Let’s take a closer look.

  • As mentioned last Wednesday, The Committee of Unsecured Creditors demanded that Mashinsky be removed. That then led to Mashinsky’s announced resignation. The committee may also try to sue Mashinsky for any damages they believe he owes.
  • According to Financial Times, Mashinsky reportedly removed $10 million from Celsius before Celsius halted withdrawals in June, citing unnamed sources.
  • A Mashinsky spokesperson said that Mashinsky and his family had $44 million in crypto frozen (in Celsius) following the withdrawal. The spokesperson also said that Mashinsky “withdrew a percentage of cryptocurrency… much of which was used to pay state and federal taxes.”

Rightfully, many are upset that Mashinsky was able to withdraw $10 million. It is a moot point for his spokesperson to say that it was for taxes and much of his assets were still frozen thereafter. Many customers could have also benefited to withdraw money for taxes and did not get the privilege to do so.