Celsius Network CEO Ran Trading Desk for Months, Report Reveals

16 August 2022, 19:45 GMT+0000
Updated by Ryan James
16 August 2022, 19:45 GMT+0000
In Brief
  • Celsius' Alex Mashinsky took over the company trading strategy in January, reported the Financial Times.
  • Mashinsky reportedly made the decision ahead of a Fed meeting, expecting a hawkish outcome.
  • The report claims that the boss personally directed individual trades and overruled expert suggestions.
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Celsius Network CEO Alex Mashinsky took over the crypto lender’s trading strategy operations in January, months before the platform filed for bankruptcy, reported the Financial Times.

The decision reportedly came before a meeting of the U.S. Federal Reserve, where it was to lay a tapering plan on the back of inflationary concerns. The report underlines that Mashinsky was convinced that a hawkish outcome would cause crypto prices to crash.

CEO allegedly overlooked trades directly

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

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

“He was ordering the traders to massively trade the book off of bad information,” a person familiar with the matter noted. “He was slugging around huge chunks of bitcoin.”

Another source with knowledge of the situation stated that while Mashinsky might have expressed his opinions based on his understanding of the cryptocurrency markets, they stressed that “he was not running the trading desk”.

Celsius to ‘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 several months of struggling to keep the company afloat following the market crash in 2022.

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

According to balance sheet data previously published in the bankruptcy proceedings cited by FT, Celsius’s liabilities were more than its assets in March this year, except for holdings of its own digital coin CEL. According to two persons with knowledge of the situation, it 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 entire company’s portfolio had naked exposure to the market,” without sufficient hedging. 

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

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.

Disclaimer

BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.