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HomeNewsCrypto NewsKnow in advance to freeze the account? Celsius founder withdraws...

Know in advance to freeze the account? Celsius founder withdraws $10 million before company goes bankrupt

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Alex Mashinsky, the founder of cryptocurrency lending firm Celsius Network, which froze customer accounts as it was on the verge of bankruptcy , has withdrawn $10 million from the company weeks before Celsius froze customer accounts, people familiar with the matter said.

Alex Mashinsky made the massive cryptocurrency withdrawals in May, when clients were withdrawing their assets from the company in large numbers, largely due to the broader volatility in the cryptocurrency market and concerns over Celsius Network’s financial health.

Celsius Network then froze withdrawals on June 12, leaving hundreds of thousands of retail investors unable to access their deposits. The company filed for bankruptcy in July, with a $1.2 billion funding hole on its balance sheet.

The peak of Celsius’ business came last year, when customers attracted by ultra-high interest rates deposited $25 billion worth of crypto assets on the platform, as some cryptocurrencies offered interest rates as high as 18%.

The news of the early withdrawal of funds will raise scrutiny of Alex Mashinsky, who recently resigned as the company’s chief executive, and has raised questions about when he first learned that Celsiu would not be able to return assets to clients.

Celsius will submit details of the Mashinsky transaction to the court in the coming days .

Mashinsky’s spokesman said that even after Mashinsky’s withdrawal, he and his family still had $44 million in crypto assets frozen by Celsius, ” at the end of May 2022, Mr. Mashinsky withdrew a portion of the cryptocurrency from his account. , mostly to pay state and federal taxes. Nine months prior to the withdrawal, he continued to deposit the same amount of cryptocurrency that he had withdrawn in May.”

The spokesperson said that Mashinsky will remain committed to working with the community on recovery plans to maximize the liquidity of cryptocurrencies .

Mashinsky, 56, who co-founded Celsiu s in 2017, is the company’s “face to the public” and appears on YouTube every week to give talks.

Celsius raised $600 million in a funding round late last year from U.S. investment firm WestCap and Canada’s second-largest pension fund, Caisse de dépôt et placement du Québec, valuing the company at $3 billion.

Despite Mashinsky’s optimism in the public eye, the company’s internal systems for managing assets are weak, sometimes paying customers more in interest than it earns on loans.

Celsius also suffered a string of investment losses in 2021 and 2022, which were not disclosed to customers. The Vermont financial regulator said Celsius was insolvent as early as May 13.

Celsius suffered a massive outflow of assets in May, when TerraUSD and sister coin Luna collapsed, battering the market and triggering a string of company closures in the crypto industry.

Celsius reassured customers that they had sufficient funds in reserve a few days before the withdrawal was frozen .

Mashinsky now faces the prospect of being forced to repatriate the $10 million he withdrew from Celsius. Under US law, a company’s payments within 90 days of bankruptcy must be recovered for the benefit of creditors .

About $8 million of Mashinsky’s withdrawals has been paid for taxes derived from income generated by Celsius’ assets, a person familiar with the matter said. As for the remaining 2 million, Celsius’ native token CEL, the withdrawal is pre-planned and related to Mashinsky’s estate planning.

Mashinsky, Celsius’ largest shareholder, has also said he was one of the company’s biggest creditors in bankruptcy. He apologized to clients in his resignation letter earlier last week, saying he was ” deeply sorry for the difficult financial situation members of the community are facing.

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