According to a source with knowledge of the company’s activities, CEO Alex Mashinsky took control of trading strategy and placed trade orders based on false information.
Unprofitable Trading Strategy
As reported by Financial Times, to shield Celsius from impending falls in the cryptocurrency market, Mashinsky personally overruled financial advisers and dictated individual trades.
According to reports, the CEO of Celsius once authorized the selling of “hundreds of millions of dollars” worth of Bitcoin before repurchasing them less than 24 hours later at a loss.
Frank van Etten, the then-chief investment officer of Celsius, and Mashinsky reportedly had frequent clashes about trading strategy due to Mashinsky’s actions.
The CEO of Celsius utilized his power to prevent the sale of shares in Grayscale’s Bitcoin Trust, or GBTC, and other investments tied to cryptocurrencies.
The company held 11 million GBTC shares worth around $400 million in September 2021. According to the news source, a solution was offered to reduce Celsius’ losses on GBTC, but Mashinsky rejected it. Ultimately, the company ended up selling them for a loss of between $100 million and $125 million in April 2022.
Wanted Staff “to Start Cutting Risk”
Mashinsky allegedly “had a high conviction of how bad the market could move south” and wanted staff “to start cutting risk” in any way possible before the Federal Reserve meeting.
The Federal Reserve did not confirm it would be raising rates until March, despite reports at the time suggesting it might do so in January.
Following the announcement, the cryptocurrency market still had volatility, but the prices of key tokens didn’t plummet for another two months, with BTC going below $30,000 in May and then under $20,000 in June.
Was CEO Running the Trading Desk?
There is no consensus on whether the CEO was “running the trading desk” or not. One of the individuals involved in the events at Celsius claimed Mashinsky was “not running the trading desk.”
According to a source, the CEO was not taking a heavy hand on trade. However, instead, he was offering his ideas on the cryptocurrency market to influence strategy.
Another person reportedly said the Celsius CEO was “slugging around huge chunks of Bitcoin” and ordering trades based on wrong information.
On the Flipside
Why You Should Care
Celsius filed for Chapter 11 bankruptcy in July after closing debts owed to Compound, Aave, and Maker. In contrast to the company’s estimates of a $1.2 billion shortfall in its bankruptcy filing, its debt was closer to $2.8 billion.
More about Celsius bankruptcy:
Celsius Network Files for Bankruptcy Protection, Leading to a 50% Loss for CEL
More about Celsius rising from the dead:
Celsius (CEL) Rises 300% Following Bankruptcy Due to Twitter Short Squeeze