Celsius Lost Over $100 Million In Grayscale Bitcoin Trust Trade : Financial Times Report

Overview:

  • Celsius CEO Alex Mashinsky took over the company’s trading strategy in January 2022.
  • Mashinsky took a more active role in trade decisions ahead of the FOMC meeting at the start of the year.
  • The report explained that Mashinsky was “lugging around huge chunks of bitcoin”.
  • Financial Times also reported that the cryptocurrency lender has been insolvent since March 2022.
  • According to reports, Ripple has suggested that it has an interest in acquiring the bankrupt crypto company.

Alex Mashinsky, the CEO of bankrupt cryptocurrency lender Celsius, assumed direct management of the company’s trading strategy shortly before a US Federal Reserve meeting in January 2022, when Mashinsky was supposedly seeking to protect the company from further declines in the crypto market.

According to a Financial Times report on Tuesday, Mashinsky’s plan fell through as the cryptocurrency lender made huge losses and eventually filed for bankruptcy in July after withdrawals on the platform were interrupted in June, as reported by EthereumWorldNews.

The report cited information from people familiar with the matter and revealed that Mashinsky vetoed trading decisions against the advice of financial experts at Celsius. An example of this occurred before the FOMC meeting in January, according to the report.

At the time, Celsius traders were ordered by the CEO to sell Bitcoin worth hundreds of millions before the Feds announced their decision. The company bought back its BTC at a loss almost a day later, according to FT’s report.

In January 2022, the cryptocurrency lender reported $50 million in trading losses. However, it remains unclear whether the entire weight of the losses resulted from Mashinsky’s decisions.

Mashinsky’s GBTC Trading And Early Insolvency Signs For Celsius

Tuesday’s news revealed that Celsius faced insolvency as early as March 2022. The report also revealed that Mashinsky shut down a GBTC transaction that ultimately lost the company more than $100 million.

As of September 2021, the cryptocurrency lender owned some 11 million tokens in the Grayscale Bitcoin Trust that had been purchased at a premium. Grayscale offers the largest BTC fund a tradable range of digital assets that tracks Bitcoin.

Grayscale is said to offer the cryptocurrency lender an option to exit its GBTC position in September after the company’s $400 million worth of BTC traded at a 15% discount. However, Mashinsky turned down the option in hopes that the discount margin would narrow.

Later in April 2022, the cryptocurrency lender finally closed its GBTC position at a 25% discount.

What next for the cryptocurrency lender and its CEO?

At the time of going to press, Celsius is being liquidated as creditors pursue legal recovery of their assets. Plans are also being made for restructuring and investigations have been launched into the company’s internal operations. Financial Times said investigators are investigating Mashinsky’s decisions that led to the cryptocurrency lender’s bankruptcy.

In addition, EWN reported that Ripple may be interested in acquiring the company’s assets

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