By Biodun Busari
The embattled founder and former chief executive officer (CEO) of Celsius Network, Alex Mashinsky removed $10 million from the now-bankrupt crypto lender, weeks before the company froze customer accounts according to a report by the Financial Times on Monday.
Mashinsky, who resigned from his position on September 27 withdrew the cryptocurrency in May.
At the period, crypto markets were facing the challenges of the collapse of the Terra ecosystem, which saw $60 billion in value evaporate that month.
Celsius is billed to tender details of Mashinsky’s transactions to the court in a few days as part of a broader financial revelation by the company.
The report revealed that Mashinsky’s spokesperson said that the entrepreneur had disclosed to an unsecured creditors committee (UCC) in the bankruptcy proceedings that he and his family had $44 million in crypto frozen with Celsius following the withdrawal.
The undisclosed spokesperson said that Mashinsky “withdrew a percentage of cryptocurrency in his account, much of which was used to pay state and federal taxes.”
Celsius froze withdrawals, swaps and transfers on its platform in June, citing “extreme market conditions” before filing for Chapter 11 bankruptcy protection one month later in the US Bankruptcy Court for the Southern District of New York.
According to FT, in a subsequent court filing, Celsius said it had a $1.2 billion hole in its balance sheet. That document showed that Celsius held $4.3 billion of assets and $5.5 billion of liabilities.
In a statement at the time of the initial bankruptcy filing, Celsius said that “without a pause, the acceleration of withdrawals would have allowed certain customers – those who were first to act – to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery.”
Mashinsky then called the decision “right…for our community and company,” adding that in 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.”
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