According to sources, Alex Mashinsky, the beleaguered founder and former CEO of Celsius Network, allegedly withdrew $10 million from the crypto lending platform just weeks before it froze customer assets and filed bankruptcy.
Approximately $8 million of the withdrawn assets were used to pay income taxes on the yield generated by the assets, with the remaining $2 million made up of the platform’s native token CEL utilized for estate planning.
The sources claim that Mashinsky took the money out “mid to late May”, before all withdrawals were stopped on June 12. The withdrawals occurred prior to Celsius filing for chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York one month later.
“In the nine months leading up to that withdrawal, he consistently deposited cryptocurrency in amounts that totaled what he withdrew in May,” the spokesperson said, adding Mashinsky and his family still had $44 million worth of cryptocurrency frozen on the platform.
“He remains committed to working with and uniting the community around a recovery plan that maximizes coins and liquidity for everyone” they added.
In the meantime, sources told the Financial Times that Mashinsky had pre-planned the withdrawal as part of his estate planning.
The disclosure of the withdrawal of funds will focus the attention of Mashinsky, who resigned as CEO on Tuesday, and raise concerns about when he understood that Celsius would be unable to refund clients’ assets.
In the upcoming days, Celsius will get information on Mashinsky’s transactions in court as part of the company’s broader disclosure of its financial problems.
Mashinsky, a former telecoms entrepreneur, may be required to repay the $10 million he borrowed from Celsius. According to US law, payments made by an organization up to 90 days before it declares bankruptcy may be rescinded in favor of all creditors.
On September 27, Mashinsky resigned as the CEO of Celsius, claiming that his position “has become an increasing distraction”. He said that he will continue to concentrate on aiding in the development of a strategy to repay money to creditors.
