Former CEO of Celsius Alex Mashinsky allegedly withdrew $10 million from the company’s account back in May, just weeks before the now-defunct crypto lending firm froze customer withdrawals, according to the Financial Times.
A source close to the matter told the FT that “the withdrawal had been pre-planned and was linked to Mashinsky’s estate planning.”
Leading up to the hefty withdrawal, Mashinsky would reportedly withdraw small amounts of crypto for taxes, the source said, and “he consistently deposited cryptocurrency in amounts that totaled what he withdrew in May.”
On September 27, Mashinsky resigned from his position as CEO, saying that he was “very sorry about the difficult financial circumstances members of our community are facing” and called himself a “distraction” to Celsius and its path to recovery.
What was once a popular lending platform with a valuation of over $3 billion found itself filing for Chapter 11 bankruptcy in July, with documents revealing a $1.2 billion hole in Celsius’ balance sheet.
Celsius and US regulators
In an attempt to return some funds to customers, Celsius is now going against some major regulatory players.
The Department of Justice stepped in with a filing on September 30, objecting to Celsius’ request to release its , stating that “the Motions are premature and should be denied until after the Examiner Report is filed.”
The bankrupt firm sought the sale of $23 million of its stablecoin holdings on September 16 to help pay for the lender’s daily operations.
Regarding its request to release those stablecoins, the DOJ rejected the motion because “any distribution or sale at this juncture could inadvertently impact or limit distributions to other creditors in this case.”
DOJ trustee William Harrington concluded the filing, saying that Celsius’ holdings are too vague to make a decision because of “a lack of transparency evidenced in the Examiner Motion and the Debtors’ [Celsius] failure to file schedules and statements of financial affairs.”