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The CEO of Celsius, Alex Mashinsky, reportedly had control of the trading strategies of the crypto lending company months before the company halted withdrawals and filed for bankruptcy. Mashinsky executed trades in the backdrop of the January rumors that the US Federal Reserve would increase interest rates.
Celsius CEO made crypto trades months before bankruptcy
A report published by the Financial Times on Tuesday said that Mashinsky directed multiple individual trades while disregarding financial experts. The trades were made to protect Celsius from an anticipated bear market.
In one of the trades, the CEO ordered the sale of hundreds of millions of dollars worth of Bitcoin before repurchasing the coins at a loss. These trades caused friction between Mashinsky ate the chief investment officer at Celsius, Frank van Etten.
The Financial Times report further said that the Celsius CEO was convinced that more dips across the crypto market were on the way and urged staff to take measures to reduce risks ahead of the Fed meeting.
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In January, there were rumors that the Federal Reserve would hike interest rates. However, this did not happen until March. The announcement did not instantly affect the crypto markets despite the rising volatility. Bitcoin crashed later in May and June, falling below $20K.
It is further reported that Mashinsky did not execute these trades himself. Instead, he strongly expressed his opinions about the crypto market, influencing the decisions taken by the trading desk. Other reports claim that he also ordered trades based on inaccurate information.
Mashinsky also used his authority as Celsius CEO to halt any sales of investment products linked to Bitcoin, such as the Grayscale Bitcoin Trust (GBTC) shares. An available deal would have allowed Celsius to reduce its losses on GBTC, but Mashinsky failed to take the deal. Celsius held 11 million GBTC shares valued at around $400 million in September 2021. The shares were sold in April 2022 at a loss of $100 million to $125 million.
Financial woes
Celsius filed for bankruptcy in July after settling its debts with Compound, Aave, and Maker and reclaiming its collateral. However, it is reported that even if the crypto lender continued operations, it would have run out of funds by October. Additionally, Celsius’ debt is estimated to be $2.8 billion, not the $1.2 billion shown in its bankruptcy claims.
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