Celsius founder withdrew $10M prior to bankruptcy filing

Lavina Daryanani
Source: Wall Street Journal

Back in June, crypto lender Celsius had frozen customer withdrawals. The next month, the company filed for bankruptcy, with a $1.2 billion dent in its balance sheet. New details have now emerged alleging the Celsius Network founder of withdrawing funds in May, before the said events shaped up.

According to a recent Financial Times report,

Celsius Network founder Alex Mashinsky withdrew $10mn from the crypto lender just weeks before the company froze customer accounts as it spiralled towards bankruptcy, according to people familiar with the matter.

Just last week, the Celsius executive resigned from the company. Per the Financial Times report, the withdrawal revelations at this stage “will intensify scrutiny” of Mashinsky and “raise questions” since he knew the company will not be in a position to return customer assets.

It is worth noting that the details regarding to Mashinsky’s transactions will likely be presented in court by Celsius in the coming days as part of a “broader disclosure” of its financial affairs.

Celsius founder uses withdrawn funds to pay taxes

A spokesperson for Mashinsky revealed that he and his family still had $44 million of crypto assets frozen with Celsius even after the withdrawals. Reportedly, the executive had disclosed the said details to an unsecured creditors committee (UCC) in the bankruptcy proceedings. With respect to what the funds were used for, the spokesperson said,

“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.”

The spokesperson further added,

“He continues to be committed to working with and uniting the community around a recovery plan that will maximise coin and liquidity for all,” they added.

Despite resigning, the executive had also assured in his note that he will continue working to “provide the best outcome for all creditors.”

Read More: Celsius Network CEO Alex Mashinsky Resigns