Celsius CEO Accused of Handling Trades Months Before Collapse

  • Celsius gained popularity with its promise of huge returns during the bull run.
  • The crypto lender filed for bankruptcy last month.

Celsius CEO Alex Mashinsky has been a figure of concern since the crypto lender collapsed and later filed for bankruptcy. There have been different reports of alleged malpractices and poor decisions which led to Celsius’s decline.

According to a Financial Times report, Alex directly controlled trade strategies at the lending firm in January, rejecting the advice of experienced traders. His complete neglect of professional advice allegedly risked the firm’s future.

Sources with knowledge of the matter claim that Alex assembled his investment team in January to inform them of his new role just before the meeting with the Federal Reserve. Alex’s move to control trade was allegedly to protect Celsius from what he thought would be a bad market. A source said of the situation,

He had a high conviction of how bad the market could move south. He wanted us to start cutting risk however Celsius could.

Alex’s trading directives caused the lending firm to incur several unwanted losses. Sources revealed that the Celsius boss once instructed the firm to sell off hundreds of millions of dollars worth of BTC. He would later repurchase the coins at a less price 24 hours later.

According to insiders, not everyone agreed with Alex’s directives, especially the company’s then-chief investment officer, Frank van Etten. Their relationship deteriorated due to their constant disagreements over trading strategies. Frank eventually left the company in February, five months after he joined.

Following the Fed meeting, cryptocurrency prices fell more than expected. In addition, a source revealed that Celsius, which at the time had $22 billion in client funds, suffered losses of $50 million in January. However, it is unknown if Alex’s involvement directly caused these losses.

Some sources claim the Celsius CEO was not taking a heavy hand on trades; instead, he simply offered his opinions. However, another insider said Alex was “slugging around huge chunks of Bitcoin” and ordering trades based on bad information.”

According to reports, Alex made further financial blunders regarding his dealings with other firms. For example, he reportedly used his power to prevent the sale of shares in Grayscale’s Bitcoin Trust, GBTC, and other investments tied to cryptocurrencies.

Sources claim that a proposal was offered to reduce Celsius’ losses on GBTC, but Alex rejected it. Celsius held 11 million shares worth around $400 million in September 2021, ultimately selling for a loss of between $100 million and 125 million dollars in April 2022.

The crypto lending firm made several other poor choices that ultimately led to its bankruptcy, including pledging the cryptocurrencies it owned as security to borrow stablecoins which it planned to use to purchase more cryptocurrencies as a replacement. Unfortunately, things did not go as planned, leaving the firm vulnerable. Celsius could not survive the demand from its customers and had to file for bankruptcy last month.

Lawrence Woriji Verified

Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.

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