Celsius: its CEO would have directed trading activities for months

The CEO of Celsius Network is said to have been running his platform’s trading operations since January, a few months before the declaration of bankruptcy.

According to the Financial Times, Alex Mashinsky made the decision ahead of a Fed meeting on its tapering plan to dampen inflation. He expected the institution to take aggressive action that would send crypto prices plummeting.

Several people familiar with the matter told the Financial Times that in the days leading up to the Fed meeting, Mr Mashinsky personally executed individual trades and ignored executives with decades of finance experience.

The article also recounts an incident in which the CEO of Celsius allegedly ordered the sale of hundreds of millions of dollars worth of bitcoins without studying the market, only to buy them back at a loss a day later.

“He was ordering traders to make massive trades based on false information,” a source close to the company noted, pointing out that he was “playing with huge amounts of BTC.”

That said, another source quoted by FT indicated that while Mr. Mashinsky was expressing his opinions based on his own understanding of the crypto market, he was not running the trading desk.

Celsius will be ‘run out of cash’ by October

On July 14, Celsius filed for bankruptcy under Chapter 11 of the US Liquidating Proceedings Act. The decision was taken after several months of struggle in the middle of the bear market.

According to court documents filed Sunday, Aug. 14, Celsius will have exhausted its reserves by October 2022. Operating expenses and capital expenditures will increase its cash flow to $34 million, the filing reads, which also reveals that the company will lose $137 million between August and October. This, mainly due to its crypto mining activities.

Citing balance sheet data published in the bankruptcy filing, Financial Times reveals that with the exception of CEL holdings, Celsius’ liabilities exceeded its assets in March. Moreover, two sources close to the company told FT that this problem has been going on since 2021.

In July, Jason Stone, a former Celsius employee and founder of KeyFi, filed a lawsuit against the company, accusing it of market manipulation and mismanagement of risk. In his complaint, Mr Stone pointed out that “the company’s entire portfolio was exposed to the market without adequate protection”.

“He knew very well how badly the market could fall. He wanted us to start mitigating risk in any way,” another Celsius employee pointed out.

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