A report has claimed that Alex Mashinsky had taken over control of trading strategies at Celsius in the months leading up to the firm’s widely publicized insolvency issues and eventual collapse. The firm filed for Chapter 11 bankruptcy in July.
Personally Directing Crypto Trades
Sources familiar with Celsius and the events surrounding its collapse have stated that CEO Alex Mashinsky was “slugging around huge amounts of Bitcoin” and ordering trades based on incomplete or insufficient information. Mashinsky had taken control of the trading strategy amidst rumors that the United States Federal Reserve was planning on hiking interest rates.
The report states that Mashinsky was personally directing trades and overruling financial experts as he looked to protect Celsius from declining crypto markets. The CEO also ordered the selling off of millions of dollars worth of Bitcoin at one point, only to re-purchase the coins at a loss 24 hours later.
Repeated Clashes
The report also shed light on the effects of Mashinky’s reckless strategy, which significantly impacted the CEO’s professional relationship with Frank van Etten, the chief investment officer at Celsius. The report claimed that Mashinsky repeatedly clashed with Etten over the trading strategies employed by the former.
According to an individual close to the matter, the CEO was convinced that the market could go south in a big way and wanted the company’s staff to begin cutting risks in any way possible before the Fed meeting.
Looming Rate Hikes
At the time, several reports were suggesting that the Federal Reserve was mulling implementing rate hikes in January. However, there was no confirmation on this by the central bank until March. Following the announcement, there was some volatility in the market. The market crash did not occur for two months when BTC fell below the $30,000 level in May and below $20,000 a month later.
Conflicting Versions
There are conflicting versions about the events at Celsius and CEO Mashinky’s role in them. Some versions seem to suggest that the CEO was not running the trading desk or taking a heavy hand on trades but was simply expressing his opinion on the prevailing market conditions to influence trading strategy.
However, other versions seem to suggest that the CEO was moving around significant amounts of Bitcoin and trading based on bad information. He had also reportedly blocked sales of investment vehicles linked to cryptocurrencies, such as shares of Grayscale’s Bitcoin Trust, with news outlets reporting that there was a deal aimed at cutting Celsius’ losses on the Bitcoin trust. However, the CEO refused the deal and then had to sell them at a loss of around $100 million in April.
The Fall Of Celsius
eventually filed for Chapter 11 bankruptcy in July after it had closed debts owed to Aave, Compound, and Maker, with the platform on track to run out of money by October. Reports have claimed that Celsius’ debts are closer to $2.8 billion against its bankruptcy claim of a $1.2 billion deficit.
