Alex Mashinsky shopped Celsius’ book before bankruptcy: FT

Celsius suffered widely publicized insolvency problems when crypto prices crashed and filed for Chapter 11 bankruptcy in July.

Mashinsky allegedly traded Celsius funds

Alex Mashinsky weighed in on Celsius Networks’ trading decisions in the months leading up to the firm’s collapse on Tuesday Financial Times the report has claimed.

According to the report, the Celsius chief took 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 raised interest rates and decided to overrule senior traders with decades of experience. In one instance, the sources claimed, he ordered the cryptolender’s trading team to sell hundreds of millions of dollars worth of Bitcoin, and the firm bought back the funds the next day at a loss. The report claims that Celsius lost $50 million through trading in January alone.

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

The Financial Times report comes after months of turbulence in Celsius. In June, it emerged that the crypto lender was facing an insolvency crisis when it stopped 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 now-defunct hedge fund Three Arrows Capital.

In the fallout from Celsius’ implosion, the firm has faced a series of controversies with Mashinsky at the center of the drama. A former executive alleged that the firm manipulated the price of its CEL token before it collapsed, and the firm was criticized when its recovery plan revealed it was hoping for a bull market to service its debt. According to Celsius’ terms of service, customers gave the firm the right to “use, sell, pledge and remortgage” their assets when they deposited their money. This means these customers may never see their money again.

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