Celsius Founder Withdrew $10M Just Ahead of Bankruptcy

Celsius Founder Withdrew $10M Just Ahead of Bankruptcy

UTC by Bhushan Akolkar · 3 min read
Celsius Founder Withdrew $10M Just Ahead of Bankruptcy
Photo: Web Summit / Flickr

A large part of the funds withdrawn has been used to pay taxes for income that arose from the assets generated on Celsius.

On Sunday, October 2, the Financial Times published a report noting that Celsius founder Alex Mashinsky withdrew $10 million in crypto just weeks ahead of freezing withdrawals.

Crypto lender Celsius Network decided to freeze withdrawals in mid-June 2022 citing liquidation issues. As troubles mounted, the company filed for bankruptcy the next month in July.

However, Alex Mashinsky pulled out $10 million worth of crypto somewhere around May. This revelation of withdrawals is likely to intensify the scrutiny of Mashinsky. It also raises the question of whether Mashinsky knew beforehand that Celsius was aware that it would be unable to give its customers their assets back.

Celsius Network will submit the details of Mashinsky’s transactions to the court in the coming days. This is part of a broader disclosure of its financial affairs by Celsius Network. A spokesperson for the Celsius CEO said that Mashinsky and his family still have $44mn of crypto assets frozen with Celsius. The spokesperson added:

“In mid to late May 2022, Mr Mashinsky withdrew a percentage of cryptocurrency in his account, much of which was used to pay state and federal taxes. In the nine months leading up to that withdrawal, he consistently deposited cryptocurrency in amounts that totalled what he withdrew in May. He continues to be committed to working with and uniting the community around a recovery plan that will maximise coin and liquidity for all”.

Allegations against Celsius Founder

Ever since the collapse of crypto lender Celsius Network, its CEO has been facing major allegations. Back in August, reports surfaced that Mashinsky interfered too much in trading calls coming from the team in Celsius.

“He was ordering the traders to massively trade the book off of bad information. He was slugging around huge chunks of Bitcoin,” one of the sources said. Because of this move, Celsius Network reportedly lost over $50 million.

In the recent development, Mashinksy could face the prospect of returning the $10 million that he withdrew from Celsius. As per US law, payments done by the company 90 days ahead of its bankruptcy can be clawed back for the benefit of all creditors.

Around $8 million worth of assets that Mashinsky withdrew have been used to pay taxes for income that arose from the assets generated on Celsius. The remaining $2 million were in the form of native $CEL tokens. It was also a pre-planned withdrawal linked to Mashinsky’s estate planning.

Last week itself Mashinksy resigned as the CEO of the company in a sudden move.

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