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A Financial Times report claims Celsius Network founder Alex Mashinsky withdrew millions of dollars in digital assets from the platform weeks before the bankrupt crypto lender froze customer accounts as its position worsened.
The report Mashinsky withdrew $10 million worth of digital assets in May at a time when the crypto lender’s customers were panicking due to falling prices.
The crypto lender froze withdrawals on June 12th and a month later for bankruptcy.
A spokesperson for Mashinsky claims that the Celsius Network founder, who resigned last week as the crypto lender’s CEO, withdrew the funds to meet tax obligations, according to the report.
“In mid to late May 2022, Mr. Mashinsky withdrew a percentage of cryptocurrency in his account, much of which was used to pay state and federal taxes. In the nine months leading up to that withdrawal, he consistently deposited cryptocurrency in amounts that totaled what he withdrew in May.”
According to the Financial Times, around $8 million of the funds withdrawn by Mashinsky were used to pay taxes. The remaining $2 million was a predetermined withdrawal as part of the Celsius founder’s estate planning, says the report.
Besides the crypto market downturn, The Financial Times says that poor weak internal systems contributed to Celsius Network’s troubles.
According to the report, the crypto lender’s weak internal systems resulted in Celsius Network sometimes paying out more in interest on the digital assets deposited on the platform than it was getting from lending out the same.
It was also reported in August that Celsius Network lost hundreds of millions of dollars engaging in proprietary trading.
