Saga of Gold-to-Dust – Crypto “Robin Hood” Alex Mashinsky of Celsius 

Authorities claim Alex Mashinsky, CEO and co-founder of “bank run” Celsius Network, drained billions of its investors. 

Crypto entrepreneur Mashinsky is spiraling into legal troubles, following a lawsuit filed by New York Attorney General Letitia James who accuses him of hiding the degrading financial health of Celsius. The crypto lender filed for bankruptcy in mid-July, 2022.

Celsius was considered to be a crypto golden child, which offered over 20% yields regarded as a “disruptive” plan that included avoiding fees and a safe alternative to banks. “At the moment I still believe Alex and the team at Celsius are figuring out ways to allow withdrawals at a certain point in time,” said a depositor named Alan to The Washington Post in June 2022. 

Many of the depositors hoped the former white knight and CEO of now-bust crypto exchange Sam Bankman-Fried to help the embattled crypto lender. SBF emerged as the “lender of last resort” for companies suffering from liquidity crisis after the TerraUSD collapse in May 2022. 

FTX backed out from a deal to save the failed lending firm after finding a huge $2 billion hole in its balance sheet, the Financial Times reported. In June 2022, Celsius froze all customers’ accounts while struggling with ongoing crypto winter.

“I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company.”

State regulators in Washington, Texas and New Jersey investigated the firm. The crypto lending company said that it had $167 million in cash to deal with liquidity problems, in order to support business operations in the restructuring process. Celsius counted its total assets and liabilities drooping between $1 to $10 billion, per The Guardian. 

Alex Mashinsky, who touted himself as a modern-day Robinhood, stepped down from his role in late-September, 2022. A blockchain spy, Coffezilla discussed a crypto scam on YouTube, noting that he found a wallet with transaction of $225,376 in CEL and USDC in September 2022, belonging to Celsius ex-CEO. 

Once among the largest crypto lenders, Celsius ended up with nearly $8 billion in loans to clients and over $12 billion in AUM (assets under management), as reported in May 2022. Mashinsky regretted dragging the firm to severe financial troubles in his resignation letter, according to CNBC.   

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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