In context: The bad news isn't alleviating for bankrupt crypto lending platform Celsius. A week after CEO Alex Mashinsky resigned from the company, cofounder S. Daniel Leon has now quit as chief strategy officer. Mashinsky is also dealing with revelations that he withdrew $10 million from the lender weeks before it froze customer accounts.
Soon after the crypto winter began back in June, decentralized finance (DeFi) platform The Celsius Network, which then was one of the biggest crypto lenders with $8 billion in client loans and almost $12 billion in assets, told its 1.7 million customers that it was pausing all withdrawals, swaps, and transfers between accounts due to "extreme market conditions." The company filed for bankruptcy just one month later.
Things haven't improved since then. Mashinsky submitted his letter of resignation last week, writing that his continued role as CEO has become "an increasing distraction."
CNBC reports that chief strategy officer Leon has now stepped down. He will be replaced by Lior Koren, Celsius' former global tax director, who will be operating out of Israel. Cointelegraph writes that Leon filed in US bankruptcy court to have his 32,600 common shares of the company declared worthless on September 5.
Our upcoming hearings are currently scheduled for October 7 and October 20, where we look forward to advancing our dialogue with the UCC and other parties.— Celsius (@CelsiusNetwork) October 1, 2022
Mashinsky is also facing a lot of questions over The Financial Times' report that he withdrew $10 million from Celsius a few weeks before customer accounts were frozen. The FT writes that he took the money out in May, just as the crypto markets were reeling from the collapse of TerraUSD (UST). It's left many wondering if Mashinsky knew Celsius would be unable to return customer assets.
According to a spokesperson for Mashinsky, the former CEO and his family still had $44 million of crypto assets frozen with Celsius even after he made the $10 million withdrawal, which he had voluntarily disclosed to the official unsecured creditors committee (UCC) in the bankruptcy proceedings. The spokesperson said about $8 million of the money was used to pay state and federal taxes, but the FT notes that under US law, Mashinsky may be forced to pay back the full $10 million.