Former Celsius CEO Withdrew $10M Ahead of Bankruptcy to ‘Pay Taxes’

Updated by Kyle Baird
In Brief
  • Former Celsius CEO Alex Mashinsky had withdrawn $10 million to cover taxes and estate planning, according to a Financial Times report.
  • A spokesperson said that Mashinsky had made deposits that equaled what he withdrew.
  • The crypto community criticized the withdrawal, while Mashinsky was saying the company was in a healthy state.
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Former Celsius CEO Alex Mashinsky withdrew $10 million in May to pay state and federal taxes and also used it for ‘estate planning.’ A spokesperson for Mashinsky said that he had deposited crypto that equaled what he withdrew.

Alex Mashinsky, the former Chief Executive Officer of the collapsed Celsius Network, has withdrawn millions to pay state and federal taxes in the weeks leading to the company’s bankruptcy filing. People close to the matter told the Financial Times that he had withdrawn $10 million from the company in May of this year as the crypto market was bleeding

The decision to withdraw funds during the time sparked concern, with the crypto community asking if Mashinsky knew the company would be in financial straits following the market crash. The report also says that the people familiar matter said that $8 million was used to pay taxes for the income generated on assets on Celsius, while the remaining $2 million was in CEL tokens and utilized for “estate planning.”

A spokesperson for Mashinsky said that he and his family still had $44 million of crypto frozen with Celsius, and that had been disclosed during the bankruptcy proceedings. However, he also pointed out that he had deposited funds that equaled what he had withdrawn to pay taxes. The spokesperson said,

“In mid to late May 2022, Mr. Mashinsky withdrew a percentage of cryptocurrency in his account, much of which was used to pay state and federal taxes. In the nine months leading up to that withdrawal, he consistently deposited cryptocurrency in amounts that totalled what he withdrew in May,”

Such behavior has undoubtedly raised eyebrows about Mashinsky, who was already in hot water. As pointed out by FatMan from the Terra community, he had been withdrawing funds as he was claiming the company had “adequate reserves.”

CEO resigns as creditors file subpoena

The developments in the Celsius case continue to occur with frequency and intensity. It was only recently that Mashinsky submitted his resignation. A press release announcing it was published on Sept. 27. The former CEO said that he would continue to work toward giving creditors the best outcome possible. 

Celsius also said that it would not force payment obligations for outstanding loans, giving some breathing room to borrowers who were involved in these. There will be no interest or penalties related to the loans.

Creditors, on the other hand, have moved to subpoena Equities First, a company that is involved in the bankruptcy case. They are looking for information regarding loan agreements that had been made between Celsius and Equities First, the latter having lent money to Celsius. They also wish to know why Equities First was unable to repay $439 million in collateral to Celsius.

FTX reportedly looking to buy Celsius assets

Meanwhile, crypto exchange FTX is looking to bid for the assets of Celsius, Bloomberg reported in late September. The Sam Bankman-Fried-led company has been making similar moves in the crypto market since the bear market set in. FTX has also purchased the assets of Voyager Digital, which also went bankrupt.

Meanwhile, the Department of Justice has gotten involved in the Celsius case. It is objecting to a motion by Celsius that would allow it to reopen withdrawals for select customers.

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