Alex Mashinsky Traded Celsius’ Book Before Bankruptcy: FT

Celsius suffered from widely publicized insolvency issues as crypto prices crashed then filed for Chapter 11 bankruptcy in July. 

Mashinsky Allegedly Traded Celsius Funds 

Alex Mashinsky intervened on Celsius Network’s trading decisions in the months leading up to the firm’s collapse, a Tuesday Financial Times report has claimed.

According to the report, the Celsius CEO took reign over the firm’s trading strategy in January ahead of a Federal Reserve meeting. According to unnamed sources familiar with the matter, Mashinsky feared that crypto prices would suffer if the Fed hiked interest rates and decided to overrule senior traders with decades of experience. In one instance, the sources claimed, he ordered the crypto lender’s trading team to sell hundreds of millions of dollars worth of Bitcoin, and the firm bought back the funds the following day at a loss. The report alleges that Celsius lost $50 million through trading in January alone. 

The sources also said that Mashinsky had multiple clashes with the firm’s former chief investment officer Frank van Etten over trading decisions and his intervention in the firm’s trading strategy. Van Etten left Celsius in February. 

The Financial Times report comes after months of turbulence at Celsius. In June, it emerged that the crypto lender was facing an insolvency crisis when it halted customer withdrawals. The firm filed for Chapter 11 bankruptcy a month later, revealing a $1.2 billion hole in its balance sheet stemming from lost bets on Terra, Lido’s staked-Ethereum token, Grayscale’s GBTC fund, and loans to the now-defunct hedge fund Three Arrows Capital. 

In the fallout from Celsius’ implosion, the firm has faced a number of controversies with Mashinsky at the center of the drama. One former executive alleged that the firm manipulated the price of its CEL token prior to its collapse, and the firm was criticized when its recovery plan revealed that it was hoping for a bull market to honor its debts. According to Celsius’ terms of use, clients gave the firm the right “to use, sell, pledge, and rehypothecate” their assets when they deposited their funds. This means that those customers may never see their funds again. 

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.