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Celsius CEO Becomes the Latest Crypto Execs to Step down amid Sluggish Market

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VOC, Voice of Crypto, Celsius

The crypto lending platform Celsius has been through serious problems this year.

In June of this year, Celsius network had a $1.2 billion hole in its balance sheets and had already filed for bankruptcy. This happened right after Voyager Digital, another crypto broker, filed for bankruptcy a month earlier in the same court.

Although Celsius has already begun to make relevant moves to pay back its debts to its institutional investors, its retail investors are left in the dark. They will likely suffer the worst effects of the latest development.

Resignation of Celsius CEO

Right after the company filed for bankruptcy, its CEO, Alex Machinsky, resigned last week. Coincidentally, the CEO of FTX, Brett Harrison, resigned on the same day.

In the letter of resignation tendered by Machinsky, the CEO expressed regrets about the company’s difficult financial situation and his inability to provide a fair and efficient solution before it escalated.

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This came right after Celsius froze customer withdrawals in June over liquidity issues and was served a lawsuit by a former employee, accusing the network of being a Ponzi scheme.

After the company’s bankruptcy filing in July, a $1.2 billion deficit was discovered on its balance sheets.

In recent news, it has been proven that Machinsky removed about $10 million from Celsius’ accounts in May, only weeks before the company halted customer withdrawals.

Creditors Move to Subpoena

EquitiesFirst, an Indianapolis-based private lending firm involved in the Celsius bankruptcy, has been subpoenaed by creditors of Celsius.

This happened right after Machinsky announced that he had borrowed money from EquitiesFirst. After Celsius repaid the loan, EquitiesFirst was unable to return the collateral. According to Machinsky, Celsius is still owed $439 million by EquitiesFirst.

The creditors on the Celsius network are now seeking details about the loan agreements between Celsius and EquitiesFirst. If the transfer of assets was in cash or crypto, and also the reason behind EquitiesFirst’s inability to repay their loan.

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Celsius has been looking at ways to repay its loans, including selling off its stablecoin holdings.

The Texas state agencies have recently objected to this decision to sell off Celsius’ stablecoin holdings. However, the hearing determining whether a stablecoin sale will hold is set to happen this week, on the 6th of October in New York.

FTX Planning to Bail Out CEL

FTX, a crypto exchange led by crypto billionaire Sam Bankman-Fried is reportedly planning to bail out Cel from its current predicament by bidding on the assets the company plans to sell off to pay back its loans.

Buying and therefore acquiring the assets of Celsius might imply that FTX intends to save the company, similar to what happened with Voyager Digital when FTX secured the winning bid at $1.4 billion.

However, an official statement from FTX or Cel is still pending at the time of writing.

FTX was reportedly in talks with investors to raise $1 billion. If received, it may help the company retain its $32 billion valuation amid the current crypto bear market.

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Disclaimer: The author’s comments and recommendations are solely for educational and informative purposes. They do not represent any financial or investment advice. Always DYOR  (do your own research)

 

 

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Jim Haastrup is a freelance blockchain and metaverse writer. He helps founders, investors, startups, crypto, and blockchain enthusiasts connect with their audience and win investment through the written word.

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