The financial publication said that Alex Mashinsky, the founder and former chief executive of Celsius Network, took $10 million out of the now-bankrupt cryptocurrency lending platform weeks before the firm stopped customer withdrawals in June, citing unnamed sources.
According to the FT, Mashinsky withdrew the cryptocurrency in May, when crypto markets were being roiled by the collapse of the Terra ecosystem, which saw $60 billion in value evaporate that month.
Celsius will provide the court with detailed information
The Financial Times reported that Celsius intends to provide the court with details of Mashinsky’s transactions as part of a broader financial disclosure by the firm soon.
According to the FT, Mashinsky told an unsecured creditors committee (UCC) during bankruptcy proceedings that he and his family had $44 million in frozen crypto with Celsius after withdrawing. Mashinsky “‘withdrew a portion of cryptocurrency from his account, much of which was used to pay state and federal taxes,'” the paper quoted the Mashinsky spokesperson as saying.
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Celsius froze withdrawals
In June, Celsius froze withdrawals, swaps, and transfers on its platform, citing “extreme market conditions” before filing for chapter 11 bankruptcy protection in the Southern District of New York one month later.
A $1.2 billion hole in Celsius’ balance sheet was subsequently mentioned in a court filing. Celsus held $4.3 billion in assets and $5.5 billion in liabilities, as recorded in a subsequent court filing.
According to Celsius, the acceleration of withdrawals would have allowed certain customers to be paid in full, leaving others behind until Celsius harvested value from illiquid or longer-term asset deployments before they received a recovery.
Mashinsky described the choice as “right for our community and company,” noting that in the history of Celsius, “we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company.”