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  • Writer's pictureVeronica Irwin

Celsius CEO resigns during lender's bankruptcy proceedings

Several leaked reports showed the crypto lender was considering risky actions with Mashinsky at the helm.


9/27/2022

Celsius Network CEO Alex Mashinsky resigned from the embattled cryptocurrency lender Tuesday morning. The lender is in the middle of bankruptcy proceedings after pausing withdrawals in June.


“I regret that my continued role as CEO has become an increasing distraction, and I am very sorry about the difficult financial circumstances members of our community are facing,” the resignation letter reads.


In a press release, Mashinsky added that he “will continue to maintain [his] focus on working to help the community unite behind a plan that will provide the best outcome for all creditors.”


Celsius said it had named CFO Chris Ferraro its chief restructuring officer and interim CEO Tuesday. Ferraro joined the company in March and became CFO in July, according to his LinkedIn profile. He previously spent 18 years in various roles at JPMorgan Chase.


Celsius became emblematic of the crypto liquidity crisis earlier this summer, leading it to pause all transactions in June. A rogue employee had also leaked thousands of users’ email addresses, adding to suspicions about the company’s stability. Another lender, Voyager, also filed for bankruptcy amid market turmoil in the same period after hedge fund Three Arrows Capital defaulted on a loan.


Several leaked reports in recent weeks showed that Celsius was plotting risky actions to save the company with Mashinsky at the helm. A leaked call showed that, rather than returning customers' assets, the company considered selling customers a new token representing their debt as a form of IOU. The call also revealed that employee assets would be returned on the same timeline as customers'. A customer leaked the audio, saying it was sent to her by an unnamed Celsius employee.


In the leaked call, CTO Guillermo Bodnar also said the company was creating a transaction management system. The company had been using an Excel spreadsheet before to track assets.


Meanwhile, the CEL token faced a short squeeze, largely organized by supporters on Twitter. The currency jumped 300% from its price after the transaction pause, despite reports suggesting that the lender was likely insolvent. Cryptic messages from Mashinsky and his wife Krissy — including a picture of Krissy Mashinsky wearing short-shorts — were interpreted by some as support for the squeeze.


Protocol link: https://www.protocol.com/bulletins/celsius-ceo-resigns-during-bankruptcy

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