Celsius CEO Alex Mashinsky reportedly “took control” of the crypto lending firm’s trading strategy amid rumors in January that the US Federal Reserve was planning to raise interest rates.
According to a Tuesday note in the Financial Times, Mashinsky personally directed the individual trades and overruled financial experts in an effort to protect Celsius from predicted declines in the cryptocurrency market. Celsius’s top executive reportedly ordered the sale of “hundreds of millions of dollars” worth of Bitcoin (BTC) in one case, buying the coins back less than 24 hours later at a loss.
Alex Mashinsky took control of Celsius trading strategy months before bankruptcy https://t.co/AnydQiZLCC
— Financial Times (@FT) August 16, 2022
Mashinsky’s actions also appear to have affected his professional relationship with Frank vanEtten, the then chief investment officer of Celsius, with whom “repeatedly collided” by the operations strategy. The Financial Times reported that a person familiar with the matter said that the CEO of Celsius “had a great conviction of how badly the downward market could evolve” and wanted the staff “start to cut the risk” in any way possible before the Federal Reserve meeting.
The news at the time suggested that The Federal Reserve could apply rate hikes in January, but the central bank did not confirm that it would do so until March. Although there was still some volatility in the cryptocurrency market after the announcement, the price of the main tokens did not crash for two months, with BTC falling below $30,000 in May and later below $20,000 in June.
One of the people reportedly familiar with the events at Celsius said that Mashinsky “didn’t run the trading desk” — apparently he didn’t have a heavy hand in trading — but instead voiced his views on the cryptocurrency market to influence strategy. Another person said that Celsius CEO was “losing massive amounts of Bitcoin” and ordering trades based on misinformation.
The Celsius CEO reportedly used his authority to block sales of cryptocurrency-linked investment vehicles, including shares of Grayscale’s Bitcoin Trust, or GBTC. The media outlet reported that a deal was available aimed at cutting Celsius’s losses at GBTC, the company held 11 million shares worth approximately $400 million as of September 2021, but Mashinsky turned it down, eventually selling at a loss of $100 to $125 million in April 2022.
Celsius filed for Chapter 11 bankruptcy in July after settling debts it owed to Compound, Aave and Maker. Cointelegraph reported on Tuesday that the crypto lending platform was on track to run out of money by mid-October, with a report suggesting that the company’s debt was closer to $2.8 billion versus its bankruptcy filing claims of a $1.2 billion deficit.
Cointelegraph reached out to Celsius and Alex Mashinsky but received no response at press time.
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