Alex Mashinsky, the former CEO of Celsius, withdrew $10 million from the crypto lending platform just weeks before it froze user assets and suspended withdrawals in June, according to unnamed sources cited by the Financial Times.
The decision to withdraw cash caused worry, and the cryptocurrency community questioned whether Mashinsky had knowledge the company would be having financial difficulties.
At the time, the collapse of the Terra ecosystem was shaking up the crypto markets. That month, $60 billion in value disappeared from the Terra ecosystem.
Mashinsky withdrew cryptocurrencies in order to pay state and federal taxes, according to a representative for the New Jersey-based company Celsius.
Celsius: Cracking Under Pressure
Celsius had 1.7 million clients and $25 billion in assets under management (AUM). Nevertheless, the crypto lender’s balance sheet was left with a $2.85 billion shortfall as a result of the present bearish crypto market.
In the nine months preceding the withdrawal, the founder “consistently deposited cryptocurrency in amounts equal to what he withdrew in May,” the Celsius representative said.
Mashinsky and his family still had $44 million worth of cryptocurrency frozen on the platform, based on reports.
According to estimates, Celsius filed for bankruptcy in July with approximated assets and liabilities between $1 billion and $10 billion and more than 100,000 creditors.
The company also posted a $1.19 billion shortfall on its balance sheet as of July 13, 2022, and had around 23,000 outstanding retail loans totaling $411 million secured by digital assets with a market value of $766 million.
Mashinsky has only lately tendered his resignation. The former CEO stated that he will continue to strive for the most favorable outcome for creditors.
What Will Happen To The Withdrawn Money?
The withdrawals at issue will be brought by Celsius in court in the next days as part of disclosures by the cryptocurrency lender regarding its finances, which should settle the questions.
In the meantime, it has been reported at the end of September that cryptocurrency exchange FTX was considering making an offer on Celsius’s assets.
The organization under Sam Bankman-Fried’s leadership has been undertaking similar actions in the cryptocurrency market ever since the onset of crypto winter.
FTX has also acquired the assets of the recently bankrupt Voyager Digital.
A Tough Year For Crypto Companies
This year has been devastating for the cryptocurrency market as investors panic-sold off their holdings in anticipation of a worldwide economic downturn and the highest inflation in more than four decades.
Nearly $2 trillion in market value, billions of dollars in frozen assets, and thousands of jobs have been lost as a result of the turbulence, but these losses may only be the beginning.
BTC total market cap at $368 billion on the daily chart | Source: TradingView.com Featured image from Coinbold, chart from TradingView.com