Reckless Trades by Celsius’ CEO Revealed Before Court Hearing

Reckless Trades by Celsius’ CEO Revealed Before Court Hearing

Celsius Network lost millions of dollars after the crypto lender's boss Alex Mashinsky took the control of its trading strategy earlier this year, overruling his team of investment veterans.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

Alex Mashinsky lost Celsius Network millions of dollars after the crypto lender’s boss overruled his experienced investors and took the reins of the company’s trading strategy months before it fell into bankruptcy, according to the Financial Times. The report said Mashinsky “was ordering the traders to massively trade the book off of bad information”, citing sources familiar with the matter.

Mashinsky’s Trading Strategy Led to $50M in Losses in January

Earlier this year, Alex Mashinsky told his investment executives at Celsius Network he intends to take control of the firm’s trading strategy, prior to the Federal Reserve meeting. According to the Financial Times, the crypto lender’s boss “personally directed individual trades” without collaborating with his experienced finance veterans.

The report says Mashinsky once sold millions of dollars worth of Bitcoin without double checking the firm’s information on its portfolio holdings. Just a day after the sale, Mashinsky purchased back Bitcoin at a higher price.

“He was ordering the traders to massively trade the book off of bad information. He was slugging around huge chunks of bitcoin.”

Alex Mashinsky took control of Celsius trading strategy months before bankruptcy.

Mashinsky’s moves came after a sharp drop in prices of bitcoin and ether from their all-time highs in November so the Celsius boss believed he must take action to protect the crypto lending company from further losses. Mashinsky was convinced that an aggressive outcome could crash cryptocurrency prices, the report continues.

Another FT source said Mashinsky wasn’t “running the trading desk” even though he made the trades based on his experience in the market. With Mashinsky taking the reins, Celsius sustained $50 million in trading losses in January ahead of the Fed’s meeting, where the central bank said it plans to hike interest rates.

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Celsius Has $2.8 Billion in Crypto Liabilities, Court Filings Show

A new document by law firm Kirkland & Ellis shows that Celsius currently has $2.8 billion in crypto liabilities. The filings also suggest that the now-bankrupt crypto firm could run out of operational cash by October this year.

Celsius filed for bankruptcy in July after the ongoing crypto winter forced the company to pause withdrawals. After announcing bankruptcy, Celsius hired Kirkland & Ellis lawyers to look for financing alternatives.

Earlier court filings showed that Celsius initially had a $1.2 billion hole in its balance sheet, but the situation appears to have exacerbated. According to the fresh court documents, the crypto lender had roughly $130 million in cash balance as of this month but Kirkland & Ellis estimates the firm will have about $40 million in deficit by the end of October.

In addition to Celsius, a number of other crypto firms fell into bankruptcy this year, including Three Arrows Digital (3AC) and Voyager Digital. The crypto market drawdown worsened after global central banks made hawkish interest rate hikes to rampage 4-decade-high inflation.

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Do you think Mashinsky’s trading actions are partly responsible for Celsius’ situation? Let us know in the comments below.

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