Media: Celsius Lost ‘Millions of Dollars’ Due to CEO Interference in Trading

Early this year, Celsius Network CEO Alex Mashinsky “took control of” the trading strategy of the crypto-lending platform and faced frictions within the team, according to people familiar with the matter cited by the Financial Times.

Mashinsky’s decisions in the run-up to the January meeting of the the Fed cost “millions of dollars.” He was convinced that the digital-asset market was in for further declines.

At the Fed’s first meeting of 2022, it signaled but postponed rate hikes до марта. After the decision, Bitcoin rose substantially, and the crypto market’s move to new lows occurred only in May along with the Terra collapse.

Mashinsky personally led individual trades and overturned decisions of executives with many years of experience in the financial sector. This gave rise to a conflict between the CEO and chief investment strategist Frank van Ettten, who left the company in February.

The team reported “massive trading on erroneous information.” In particular, the CEO once ordered selling “the first cryptocurrency for hundreds of millions of dollars,” without examining the size of the long position. The following day, the closing of the formed short position led to the realization of losses.

The publication also provides data on Mashinsky’s blocking of the sale of 11 million GBTC, whose discount to NAV reached 15%, whereas the firm acquired them at a premium. The value of the Bitcoin Trust’s shares was estimated at $400 million at the time. In April, the CEO agreed to divest of the asset when the discount rose to 25%. The loss from this operation amounted to between $100 million and $125 million.

Subsequently, Celsius Network attempted to cut losses by borrowing funds from other crypto firms, using as collateral the tokens it held itself for loans issued in stablecoins.

According to the latest estimate, from August to October Celsius Network could lose $137 million due to investments in the mining business and restructuring costs. The size of the hole in the company’s balance sheet stood at $2.85 billion.

Earlier, the platform’s creditors’ committee called Mashinsky’s assurances “empty and false,” which he gave days before the freezing of customer assets.

As reported, Celsius подала for bankruptcy in a New York court under Chapter 11 of the U.S. Bankruptcy Code.

On July 19, the company unveiled a business-reorganization plan. It envisages directing the profits of its mining subsidiary to compensate users’ losses and pay creditors. Previously, Celsius Mining подала в SEC for an initial public offering.

On August 12, it emerged that the Celsius Network creditors’ committee, during a bankruptcy-court hearing, obtained a court order prohibiting the sale of a portion of the mined bitcoins.

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