Celsius Network founder and former CEO Alex Mashinsky reportedly withdrew $10 million from the crypto lending platform just weeks before the company froze customer funds and filed for bankruptcy..
The withdrawal was cited by Financial Times sources who said that Mashinsky withdrew the funds in “mid to late May” before the June 12 pause on all withdrawals.
Celsius was a popular crypto lending platform, with 1.7 million customers and $25 billion in assets under management, but the poor conditions prevailing in the cryptocurrency market ended up leading the company to a $2.85 billion hole in its balance sheet.
This prompted Celsius to pause customer withdrawals in June before filing for Chapter 11 bankruptcy in July.whereupon Mashinksy attempted to restructure and revive the company to rely on crypto custody services.
The withdrawal raises questions about whether Mashinsky knew in advance that the company was going to freeze client funds and withdrawals..
Nevertheless, a Celsius spokesperson told the FT that the founder withdrew the cryptocurrency at the time to pay state and federal taxes..
“In the nine months prior to that withdrawal, he consistently deposited cryptocurrency in amounts totaling what he withdrew in May,” the spokesperson said.adding that Mashinsky and his family still had $44 million in crypto frozen on the platform.
In the meantime, sources told the FT that the retirement was planned in advance in accordance with Mashinsky’s estate planning.
About $8 million of the withdrawn assets was used to pay sales tax on the returns the assets produced, with the remaining $2 million made up of the native Celsius platform token (CEL)..
The questions will likely be answered when the transactions in question are presented by Celsius in court in the coming days. as part of the crypto lender’s disclosures about their finances.
Also there is a possibility that Mashinsky may be forced to repay the $10 million, as in the 90 days prior to filing for bankruptcy, a company’s payments may be reversed to benefit creditors under United States law.
Mashinsky resigned as CEO of Celsius on September 27, stating that his role “has become an increasing distraction”, but said he would continue to focus on helping find a plan to pay creditors back.
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