Alex Mashinsky, the founder and former CEO of Celsius Network, reportedly took $10 million out of the platform just weeks before the company filed for bankruptcy and froze customer funds. According to the Financial Times, the ex-owner of the cryptocurrency lending company took out the funds in “mid-to-late May” before shutting off customer withdrawals on June 12.
Celsius Network had 1.7 million clients and $25 billion of assets under management before its bankruptcy. However, the crypto winter and weak market conditions led to a $2.85 billion deficit in its balance sheet.
This large withdrawal raises the question of whether Mashinsky had inside information when he took money out and frozen funds. According to a spokesperson for the company, he used the digital currencies to pay federal and state taxes.
Mashinsky allegedly deposited cryptocurrency in amounts equal to what he withdrew from May in the nine months preceding that withdrawal, according to the company representative. He also noted that Mashinsky and his relatives had $44 million worth of crypto frozen on the platform.
He may have to repay the $10 million. Any payments made by the company in the 90 days preceding bankruptcy filing can be reversed under US law. These questions will be answered in court. Celsius is scheduled to appear in court in the coming days as part of the disclosures about its finances.
Mashinsky, who resigned as CEO on September 27, stated that his role had become an increasing distraction. However, he vowed to keep working to find a way to repay creditors.
