Celsius CEO Alex Mashinsky reportedly overruled executives with decades of experience, taking the firm's trading choices into his own hands.

alex mashinksy, crypto lending, crypto, cryptocurrency, celsius, btc, bitcoin, bankruptcy, gbtc

Alex Mashinksy, the CEO of the now-bankrupt crypto lending platform Celsius, had taken personal control of the firm’s trading strategy before its collapse, according to a Financial Times report citing multiple people familiar with the matter.

Mashinksy reportedly gathered his investment team in January to inform them that he would be personally assuming control of the company’s trading strategy.

The meeting took place prior to a meeting of the Federal Reserve, during which the central bank revealed plans to raise interest rates—a move that, as Mashinksy was convinced, would have a negative impact on crypto markets.

By that time, the price of Bitcoin fell from its November all-time high of almost $69,000 to levels closer to $40,000.

‘Huge chunks of Bitcoin’ moved by Mashinksy

The report claims that in the days before the Fed’s meeting, Mashinksy overruled executives with decades of experience in financial markets as part of his trading overhaul.

“He had a high conviction of how bad the market could move south. He wanted us to start cutting risk however Celsius could,” one of the people familiar with the events told the Financial Times, adding that not everyone agreed with the CEO.

One person the CEO reportedly clashed with over what trades Celsius should make and Mashinsky’s personal involvement in these decisions was the company’s then-chief investment officer Frank van Etten.

Van Etten’s spell at Celsius was quite short—the former Nuveen and UBS executive joined the company in September 2021 only to leave in February this year.

“He was ordering the traders to massively trade the book off of bad information,” one of the sources told the Financial Times. “He was slugging around huge chunks of Bitcoin.”

The crypto prices slumped further following the Fed’s meeting, with one source claiming that Celsius, which at the time held $22 billion in customer funds, incurred $50 million in losses in January.

It is not clear, though, how much of that amount was due to Mashinsky’s involvement in the company’s trading strategies.

Decrypt has contacted Celsius and Frank van Etten but has yet to hear back at press time.

Celsius’ undisclosed trades

The report also alleges that Celsius suffered hefty losses that the firm did not disclose to customers—despite Mashinsky’s public statements that it did not trade customer assets.

One such incident involved a U.S.-based lending firm EquitiesFirst, which owes Celsius $500 million worth of Bitcoin. As prices fell, the crypto lender hedged that exposure by buying Bitcoin ahead of repayment, with Mashinsky reportedly arguing that EquitiesFirst would be able to pay back its debt faster.

However, evidence that EquitiesFirst would repay its debt any faster simply didn’t exist.

“We entered into an agreement [with Celsius] well before the January date mentioned. Any alteration to that agreement would have required consensus from all parties,” a spokesman for EquitiesFirst told the Financial Times, adding that the company intends to fulfill all its obligations to Celsius.

Celsius and the Grayscale Bitcoin Trust

Another, previously unreported incident, involved what the report calls “a sizable investment” in the Grayscale Bitcoin Trust (GBTC), with one source indicating that the crypto lender suffered losses on GBTC of up to $125 million.

GBTC is a financial vehicle that enables investors to trade shares in trusts that hold pools of Bitcoin, with each share meant to track the current price of Bitcoin; the idea is that investors can gain exposure to the leading cryptocurrency without having to actually buy and hold the asset itself.

However, since February 2021, shares in GBTC have traded at a discount, meaning that GBTC trades for less than the net value of the Bitcoin held by Grayscale to back the trust.

Celsius incurred its losses after buying GBTC when it traded at a premium to Bitcoin.

By September 2021, Celsius held 11 million shares of GBTC, worth about $400 million, but which were then trading at a 15% discount to the trust’s net asset value.

Celsius was offered a deal to exit the position, but Mashinsky reportedly blocked the sale of the company’s GBTC holdings, arguing that the discount might eventually narrow.

Things, however, turned otherwise, as the GBTC discount continued to worsen, with Celsius exiting the position only in April this year, when the discount fell to 25%.

Bitcoin mining business falls short

A series of other poor decisions that eventually resulted in the company’s bankruptcy last month included pledging cryptocurrencies the firm held as collateral to borrow stablecoins it would later use to buy more crypto to replace those it had lost, other sources said.

These arrangements, however, meant that Celsius was vulnerable to sharp declines in crypto prices. The firm would have little of its own cash in situations where customers would demand their crypto back at the same time that it had to send more to its lenders as additional collateral for the stablecoin borrowings.

The report added that Celsus also invested much of the $600 million it raised from investors, including Canada’s second-biggest pension and insurance fund Caisse de Dépôt and New York-based WestCap Group, into its Bitcoin mining subsidiary.

The mining business was meant to be used to generate additional Bitcoin to pay back creditors and clients. Last month, however, it also joined the parent company in bankruptcy protection proceedings.

Stay on top of crypto news, get daily updates in your inbox.


Roblox Weight Lifting Simulator 5 Codes (October 2022)

Roblox Weight Lifting Simulator 5 is about lifting weights and becoming the strongest amongst your friends. There is a lot to do in the game, and you can also team up with your friends and go on brawls to prove your strength. After all, that’s why we all lift ...

View more: Roblox Weight Lifting Simulator 5 Codes (October 2022)

How to get Pupa Leather in Grounded

Screenshot by Gamepur Pupa Leather is a highly sought-after resource in Grounded because of the high-value items that it can be used to make. The tier three armor and tools made from this will help keep you alive and advance you along on your progression path. Finding it will ...

View more: How to get Pupa Leather in Grounded

Stadia game developers had no idea Google was killing Stadia

Here's how the games industry is reacting to the news that Stadia is going away.

View more: Stadia game developers had no idea Google was killing Stadia

Roblox Sword Lands Simulator codes (October 2022)

Image Via Roblox Roblox has no shortage of amazing games; there is something for everyone. If you are looking for a legendary sword game where you go on tons of exciting adventures, Roblox Sword Lands Simulator will be your next favorite. It’s a fairly new game, but it is ...

View more: Roblox Sword Lands Simulator codes (October 2022)

Roblox Stone Miner Simulator 2 codes (October 2022)

Image Via Roblox There are many games on Roblox, but only a few where you get to ride a vehicle and mine the stones to get gold. If you are looking for such a Roblox game, then Roblox Stone Miner Simulator 2 is perfect. In this game, you start ...

View more: Roblox Stone Miner Simulator 2 codes (October 2022)

New Netflix Originals in October 2022

Check out the Originals coming to Netflix this October

View more: New Netflix Originals in October 2022

Today’s Wordle Answer (September 30th, 2022): Puzzle 468 Hints, Clues, and Solution

You may not have solved it yet, but try not to treat today’s Wordle answer for September 30th, 2022, with too much contempt. Some people might scoff at the word featured in Puzzle 468, but as much as it’s worthy of disdain, it’s still a decent Wordle challenge. It’s ...

View more: Today’s Wordle Answer (September 30th, 2022): Puzzle 468 Hints, Clues, and Solution

How to Disable Auto Save to OneDrive in Windows 10/11

Depending on the settings, your computer might be automatically uploading Files to OneDrive. You can find below the steps to disable Auto Save to OneDrive in Windows 10/11. Disable Auto Save to OneDrive in Windows 11/10 When you sign-in to OneDrive using Microsoft Account, OneDrive prompts you to save Photos, ...

View more: How to Disable Auto Save to OneDrive in Windows 10/11

Roblox Reaper 2 codes (October 2022)

Uniswap (UNI) Leads Gains Among Top Coins

How to increase unit rarity in Moonbreaker

Roblox Muscle Race Clicker codes (October 2022)

Apple’s iPhone 15 Pro and iPhone 15 Pro Max could offer different features

Apple sparks confusion with iOS 16 message replies change

Here are the free games hitting Xbox Games with Gold in October 2022

Why Most Public Bitcoin Miners Have Performed Terribly In Their Lifetimes

Casting Metal With A Microwave And Vacuum Cleaner

New Microsoft Exchange zero-day actively exploited in attacks

The 10 Best Superhero Video Games

Alex Bowman to Miss Talladega With Concussion-like Symptoms


Top Car News Car News