Alex Mashinsky, the founder and former CEO of FT Celsius Network, is said to have taken $10 million out of the crypto lending platform a few weeks before the company froze customer funds and went bankrupt.
Sources from the Financial Times said that Mashinsky took out the money in “mid- to late-May,” before all withdrawals were stopped on June 12.
Celsius was a popular crypto-lending platform with 1.7 million customers and $25 billion in assets under management. However, the bad conditions in the crypto market caused the company’s balance sheet to show a $2.85 billion hole.
This caused Celsius to stop letting customers withdraw money in June. In July, the company filed for Chapter 11 bankruptcy, and Mashinksy tried to restructure and bring the company back to life so that it would focus on crypto custody services.
The withdrawal makes people wonder if Mashinsky knew that the company would freeze customer funds and withdrawals before he made the move.
But a representative of Celsius told FT that the company’s founder had taken out cryptocurrency at the time to pay state and federal taxes.
“In the nine months before that withdrawal, he consistently put in amounts of cryptocurrency that added up to what he took out in May,” the spokesperson said, adding that Mashinsky and his family still had $44 million worth of cryptocurrency frozen on the platform.
Sources told the FT that Mashinsky had already planned to leave the country as part of his estate planning.
About $8 million of the withdrawn assets were used to pay taxes on the income the assets generated, and the other $2 million was made up of CEL, the platform’s native token.
Most likely, the questions will be answered when Celsius shows the transactions in question in court in the next few days as part of its financial disclosures.
There is also a chance that Mashinsky could be forced to give back the $10 million. In the 90 days before a company files for bankruptcy, payments made by the company can be taken back to help creditors.
Mashinsky quit as CEO of Celsius on September 27. He said that his job “has become an increasing distraction,” but he said he would still try to find a way to give money back to creditors.