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Amidst bankruptcy proceedings, Celsius head Mashinsky resigns

CElsus Mistakenly Doxxed Its Users
CElsus Mistakenly Doxxed Its Users

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2022 has been more or less, a period of total chaos for the Defi sector. As one of the most successful blockchain categories, Defi is looked at as a revolutionary concept that could bring several major changes as well as major developments within the economic sector on a global level. While there are also a number of parties that look at the concept critically, Defi has managed to position itself as a high-potential sector.

However, the post-crash effects left a huge majority of defi projects in trouble, causing several ones to file for bankruptcy. The major reason for liquidity crunches within these organizations was a major lack of interest and participation from investors. Since the market crashed, projects that were once thriving started to lose customers at a quick pace.

While this has now started to change, there still are some cases in which, millions of investor money was lost. One of the most popular such cases in 2022 that shook the defi world was when Celsius, the lending organization declared bankruptcy. The company which is currently undergoing bankruptcy proceedings, recently announced that its CEO Alex Mashinsky would be resigning.

Mashinsky to be temporarily replaced by Chris Ferraro

On 27th September, Alex Mashinsky stepped down from his post as the CEO of Celsius and appointed Chris Ferraro as the interim CEO. Chris Ferraro has an experience of over 18 years at JP Morgan and Chase before he was a part of the Celsius Network. Ferraro will also serve as the Chief restructuring officer as appointed by the company, hinting toward an attempt towards reviving the project to its former glory.

In his resignation letter to the board of directors of Celsius, Mashinsky mentioned that although he was leaving the organization behind, he would remain committed to helping and contributing to the project’s growth. He also addressed the concerns raised by the community during his tenure as the CEO and apologized for any difficult financial circumstances that the users of the project had to face.

This move is being met by the community with mixed reactions, as it may negatively impact the company’s legal proceedings. However, Celsius Network has assured its users that it will not affect the current status of the project and its further growth in any way.

What is Celsius Network?

Founded in 2017 by Alex Mashinsky and S. Daniel Leon, Celsius Network was a leading cryptocurrency lending company. Headquartered in New Jersey, Celsius was one of the many Defi projects to shoot up in value when the bull market was at its peak. Operating on a global scale, the company has offices in four countries.

Using Celsius Network, users could lend their cryptocurrencies for attractive interest rates, or even borrow funds by pledging their own assets as securities. It became highly active in the 2021 defi boom and was used by thousands of investors worldwide at a point. Before it crashed, Celsius managed assets worth $12 billion.

On June 7th Celsius addressed rumours of the company losing funds due to several bad investments. They stated that the company being one of the biggest defi lenders, was positive that this wasn’t the case and that the accusations were baseless.

However, on June 13th, Celsius paused withdrawals stating it as the time required to “stabilize liquidity and operations”. This was met with much criticism from the industry and eternal financial organizations too. The CEL token too lost more than 90% of its value almost immediately after this.

Finally, on July 13th, the company filed for bankruptcy.

How will this affect the Defi Sector?

The defi or decentralized finance sector has been a concept of brilliance to the financial world. However, issues and concerns regarding Defi have always surfaced after regular intervals due to issues such as the one mentioned above.

In 2022, Celsius wasn’t the only organization to be subject to liquidity issues. Several other major and minor projects too were on the brink of bankruptcy. To ensure that these problems are solved by the next bull run, Defi companies will have to consistently study and build a better infrastructure for their projects.

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