March 27, 2023

Before filing for bankruptcy, Celsius’s founder withdrew $10 million

Before the company froze customer funds and filed for bankruptcy, Celsius Network founder and former CEO Alex Mashinsky allegedly withdrew $10 million from the crypto lending platform just weeks ago.

Sources were quoted as stating that Mashinsky withdrew the funds in “mid to late May” before the June 12 pause on all withdrawals.

With 1.7 million customers and $25 billion in assets under management, Celsius was a popular crypto lending platform, but poor conditions in the crypto market ended up leading the company to a $2.85 billion hole in its balance sheet.

In June, this prompted Celsius to pause customer withdrawals before filing for Chapter 11 bankruptcy in July, with Mashinksy attempting to restructure and revive the company to rely on crypto custody services.

The withdrawal raises questions about whether Mashinsky knew in advance that the company was going to freeze client funds and withdrawals.

Through a spokesman it was learned that the founder withdrew the cryptocurrency at the time to pay state and federal taxes.

The spokesperson said, adding that Mashinsky and his family still had $44 million in cryptocurrency frozen on the platform. “In the nine months prior to that withdrawal, he consistently deposited cryptocurrency in amounts totaling what he withdrew in May.”

Meanwhile, sources told the FT that the retirement was planned in advance in accordance with Mashinsky’s estate planning.

Close to $8 million of the withdrawn assets was used to pay sales tax on the returns the assets produced, with the remaining $2 million made up of the Celsius platform’s native token (CEL).

The questions will likely be answered when the transactions in question are presented by Celsius in court in the coming days as part of the crypto lender’s financial disclosures.

In addition, there is the possibility that Mashinsky may be forced to repay the $10 million, since in the 90 days prior to filing for bankruptcy, a company’s payments can be reversed to benefit creditors under US law.

Mashinsky resigned as CEO of Celsius on September 27, admitting that his role “has become an increasing distraction” but said he would continue to focus on helping find a plan to pay creditors back. Posted by Cryptobtcbrowser, news and information agency.

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