Celsius Networks CEO ran Trading Desk for months, report reveals

Celsius Network CEO Alex Mashinsky took over the crypto lender’s trading strategy operations in January, months before the platform filed for bankruptcy, the Financial Times reported.

The decision reportedly came before a meeting of the US central bank, where it was to lay out a tapering plan against the backdrop of inflation concerns. The report emphasizes that Mashinsky was convinced that a hawkish outcome would cause crypto prices to crash.

The CEO allegedly overlooked trades directly

Several people familiar with the situation told the FT that Mashinsky personally directed individual trades and overruled managers with decades of financial experience in the days leading up to the Fed meeting.

The report also recounts an incident in which the Celsius boss ordered the sale of hundreds of millions of dollars worth of bitcoin without double-checking, only to buy back the holdings at a loss a day later.

“He ordered the traders to massively switch the book from bad information,” noted a person familiar with the matter. “He was slinging around huge chunks of bitcoin.”

Another source with knowledge of the situation stated that while Mashinsky may have expressed his opinions based on his understanding of the cryptocurrency markets, they emphasized that “he did not run the trading desk”.

Celsius will run out of money by October

Celsius Network announced on July 14 that it had officially filed for Chapter 11 bankruptcy. The announcement came after months of struggling to keep the company afloat after the 2022 market crash.

According to court documents filed Sunday, Celsius’ liquidity can only support it until October 2022. The operating costs and capital expenditures will turn cash flow into a negative $34 million, the filing shows. It also reveals that it would lose $137 million between August and October, primarily due to mining.

According to balance sheet data previously published in the bankruptcy proceedings cited by the FT, Celsius’ debts exceeded its assets in March this year, excluding holdings of its own digital coin CEL. According to two people with knowledge of the situation, this has been the case since 2021.

That said, a former employee of the troubled crypto lender, who had launched a lawsuit in July, had accused the company of market manipulation and risk management failures. In the complaint, Jason Stone, the founder of KeyFi, had also said that “the company’s entire portfolio had bare exposure to the market,” without adequate collateral.

“He had a high conviction about how badly the market could move south. He wanted us to start cutting risk like Celsius could,” another person noted, as disagreement built on the approach.

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