Last June, the crypto crisis hit one of Israel’s cryptocurrency companies, which was considered to be the largest in the field - Celsius Network - and they thereby announced that it was stopping all deposits and withdrawals from its lending platform. Since then, the company has managed to win a lawsuit from one of its former investment managers who claimed that the company was a Ponzi scheme while also declaring bankruptcy. Last week the CEO and one of the founders resigned from his position, but a new report paints a problematic picture of his conduct just before the company’s demise.

Weeks before users' money was frozen

According to a Financial Times report, the CEO of Celsius Network and one of its founders, Alex Mashinsky, allegedly withdrew $10 million from the company just weeks before it collapsed and stopped the deposits and withdrawals of users. According to the report, based on several sources familiar with the matter, Mashinsky withdrew cryptocurrencies worth $10 million from his account last May, after many users of the platform did so themselves following the fluctuations in the crypto market.

On June 12, Celsius stopped deposits and withdrawals from its platform and at the same time its cryptocurrency – CEL – crashed due to the market’s situation. According to the company, the move to halt deposits and withdrawals was intended to "stabilize its activity" in order to meet its commitment to customers. In practice, this did not happen and a month later the company filed for bankruptcy.

Mashinsky resigned from his position last week amid the company's bankruptcy proceedings and in light of demand from its creditors. Mashinsky wrote in his resignation letter: "I regret that my continued role as CEO has become an increasing distraction, and I am very sorry about the difficult financial circumstances members of our community are facing."

According to the FT report, in the coming days, Celsius is expected to reveal to a court the history of the transactions carried out by Mashinsky on the platform of the company he headed, as part of a broader disclosure of Celsius's financial conduct. It was also reported that Mashinsky may be required to return the $10 million he withdrew from his account before the company's collapse; it was withdrawn within 90 days before Celsius filed for bankruptcy.

A spokesman for Mashinsky told a British news outlet that he and his family still hold crypto assets worth $44 million, which were also frozen by the company in June after the reported withdrawals (worth $10 million). The spokesperson also stated that most of the capital withdrawn by Mashinsky was used to pay taxes and that he himself deposited the same amount of crypto in the 9 months preceding this withdrawal of the assets.

We contacted Celsius Network to get its response to the article but did not receive one by the time of publication. When received, the article will be updated.

Feature image was taken from Celsius's YouTube channel