Celsius, the US-headquartered crypto lending platform, filed for bankruptcy in July to “provide the company with the best opportunity to stabilise the business”. Now, a report by Financial Times, citing sources familiar with the matter, said that the embattled company’s CEO Alex Mashinsky took charge of Celsius’ trading strategy and placed some bad bets with considerably large sums of Bitcoin (BTC) that backfired. Mashinsky reportedly “took control” just months before Celsius filed for bankruptcy protection. Furthermore, Celsius also got signoff from a US bankruptcy judge to mine and sell Bitcoins, but not stocks or debt.
“He was ordering the traders to massively trade the book off of bad information,” the Financial Times report quoted a source. “He was slugging around huge chunks of Bitcoin.” Interestingly, the report also did quote another individual who said that Mashinsky wasn’t actually running the trading desk. However, other sources quoted in the report asserted that Mashinsky “clashed” with the company’s CIO repeatedly. “He had a high conviction of how bad the market could move south. He wanted us to start cutting risk however Celsius could,” a source was quoted as saying.
A separate report by Reuters noted that Chief U.S. Bankruptcy Judge Martin Glenn provided a signoff to Celsius to mine and sell BTCs during bankruptcy. He reportedly noted that Bitcoin mining won’t immediately be profitable since Celsius needs to make additional investments to get its mining facilities running at full capacity, but said he would allow it to proceed nevertheless.
However, the judge also added that he has blocked Celsius from selling equity or debt investments in other crypto firms until it provides more information about the assets it wishes to sell, as per Reuters.
Celsius announced on July 14 that the company has initiated a “restructuring process” to stabilise its business and “consummate a comprehensive restructuring transaction that maximises value for all stakeholders.” It has filed for voluntary petitions for reorganisation under Chapter 11 of the US Bankruptcy Code. As per a report by Reuters, Celsius listed estimated assets and liabilities on a consolidated basis in the range of $1 billion to $10 billion.
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