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

Summary:

Celsius CEO Alex Mashinsky took over the company’s trading strategy in January 2022.
Mashinsky assumed a more active role in trade decisions ahead of the FOMC meeting at the start of the year.
The report explained that Mashinsky was ” slugging around huge chunks of bitcoin”.
Financial Times also reported that the crypto lender faced insolvency since March 2022.
Ripple has hinted at an interest in acquiring the bankrupt crypto company, per reports.

Alex Mashinsky, the CEO of bankrupt crypto lender Celsius, assumed direct management of the firm’s trading strategy shortly before a U.S. Federal Reserve meeting held in January 2022 as Mashinsky moved to supposedly 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 crypto lender made massive losses and eventually filed for bankruptcy in July after withdrawals on the platform were paused 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 finance experts at Celsius. One example of this according to the report, happened before the FOMC meeting in January.

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

In January 2022, the crypto lender reported $50 million in trading losses. However, it remains unclear if the full weight of the losses were a result of Mashinsky’s decisions.

Mashinsky’s GBTC Trade and Early Insolvency Signs For Celsius

Tuesday’s news revealed that Celsius faced insolvency as early as March 2022. The report also disclosed that Mashinsky stopped a GBTC trade that eventually lost the firm more than $100 million.

As of September 2021, the crypto lender held some 11 million tokens in the Grayscale Bitcoin Trust bought at a premium. Grayscale provides the largest BTC fund with a tradeable digital asset offering that tracks Bitcoin.

Grayscale supposedly offer the crypto 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 the hopes that the discount margin would reduce.

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

Celsius CEO Alex Mashinsky (Source: Forbes)

What Next For The Crypto Lender And Its CEO

At press time, Celsius faces liquidation as creditors pursue legal recovery of their assets. Plans for restructuring are also underway while probes have been launched into the company’s internal operations. Financial Times said that investigators are looking into Mashinsky’s decisions leading up to the bankruptcy of the crypto lender.

Furthermore, EWN reported that Ripple might be interested in acquiring the firm’s assets