Celsius Lost Over 0 Million In Grayscale Bitcoin Trust Trade: Financial Times Report

Celsius Lost Over $100 Million In Grayscale Bitcoin Trust Trade: Financial Times Report

Summary:

  • Celsius CEO Alex Mashinsky took over the company’s trading strategy in January 2022.
  • Mashinsky assumed a more active role in trade decisions ahead of the FOMC meeting at the beginning of the year.
  • The report explained that Mashinsky was “slinging around huge chunks of bitcoin”.
  • The Financial Times also reported that the crypto lender has been insolvent since March 2022.
  • Ripple has indicated an interest in buying the bankrupt crypto company, according to reports.

Alex Mashinsky, CEO of bankrupt crypto lender Celsius, took direct control of the firm’s trading strategy shortly before a January 2022 meeting of the US Federal Reserve, as Mashinsky moved to allegedly protect the company from further declines in the crypto market.

According to a Financial Times report on Tuesday, Mashinsky’s plan fell through when the crypto lender made heavy losses and eventually filed for bankruptcy in July after withdrawals on the platform were halted in June, as reported by EthereumWorldNews.

Citing information from people familiar with the matter, the report revealed that Mashinsky vetoed trading decisions against the advice of financial experts at Celsius. An example of this, according to the report, happened before the FOMC meeting in January.

At the time, Celsius traders were ordered by the CEO to sell hundreds of millions worth of Bitcoin before the Feds announced their decision. The company bought back its BTC at a loss almost a day later, according to the FT’s report.

In January 2022, the crypto lender reported $50 million in trading losses. However, it remains unclear whether the full weight of the losses was a result of Mashinsky’s decisions.

Mashinsky’s GBTC trade and early insolvency sign for Celsius

Tuesday’s news revealed that Celsius faced insolvency as early as March 2022. The report also revealed that Mashinsky stopped a GBTC trade that ultimately lost the firm more than $100 million.

As of September 2021, the crypto lender had about 11 million tokens in the Grayscale Bitcoin Trust purchased at a premium. Grayscale provides the largest BTC fund with a tradable digital asset offering that tracks Bitcoin.

Grayscale is reportedly offering the crypto lender an option to exit its GBTC position in September after the company’s $400 million worth of BTC traded at a 15% discount. However, Mashinsky rejected the option in the hope that the discount margin would be reduced.

Later in April 2022, the crypto lender closed its GBTC position at a 25% discount.

What next for the crypto lender and its CEO

At press time, Celsius is facing liquidation as creditors seek legal recovery of its assets. Plans for restructuring are also ongoing while investigations into the company’s internal operations have been initiated. The Financial Times said investigators are looking into Mashinsky’s decisions that led to the bankruptcy of the crypto lender.

Furthermore, EWN reported that Ripple may be interested in buying the company’s assets

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