The Celsius collapse timeline just received sharp punctuation: CEO Alex Mashinsky resigned Tuesday, three months after the initial shutdown of a crypto lending scheme that lost investors billions.
In a letter and press release sent out at 10 a.m. EST, Mashinsky said he decided to resign as CEO but would keep his position as the director of Celsius Network Ltd. because the role had become “an increasing distraction.”
“I elected to resign my post as CEO of Celsius Network today. Nevertheless, I will continue to maintain my focus on working to help the community unite behind a plan that will provide the best outcome for all creditors — which is what I have been doing since the company filed for bankruptcy,” Mashinsky said.
Offers to help reorganize
“I believe we all will get more if Celsians stay united and help the UCC with the best recovery plan. I remain willing and available to continue to work with the company and their advisors to achieve a successful reorganization.”
Mashinsky was on the stage at the Fintech Nexus conference in late May, telling the crowd there would be “blood on the streets” after the Terra Luna stablecoin collapse. The company had an official stance that it suffered no exposure to the collapse.
As reporter Isabelle Castro pointed out, Celsius was exposed to Luna, like many other institutions in the crypto lending space.
The timeline: on May 11, Luna crashed 99% as the liquidity protocol between the stablecoin and pegged token collapsed. A week later, Mashinsky denies any problem. On June 13, Celsius shut down withdrawals for good.
‘Challenging circumstance’
As the company started bankruptcy proceedings, it became clear it was not just the crash of a popular stablecoin situation but an endemic problem.
Celsius said Chris Ferraro, the CFO, would become Chief Restructuring Officer and interim CEO. The announcement was made by David Barse and Alan Carr, special committee members of the board of directors of Celsius.
The company said in a release that Barse and Carr noted that during the chapter 11 proceedings, Ferraro has been helpful during challenging circumstances.
“The Special Committee is grateful to Alex for his dedication to the company and his efforts to assist with the company’s restructuring,” said Barse and Carr.
“We look forward to the company’s continued engagement with the Unsecured Creditors’ Committee and other key stakeholders in our case, under Chris’ leadership, to consummate a comprehensive and expeditious restructuring that maximizes value for all stakeholders.”
According to the bankruptcy filing that Castro searched in July, there was a $1.2 billion hole in the company’s balance sheet and around $4.6 billion owed to customers.
Castro’s story highlighted that Ferraro knew there were issues in the company’s financials, including massive losses in 2021. Filings showed that the company repeatedly lied about liabilities, had a $75 million exposure to the 3AC fund, and was exposed to the Luna Crash and the cascade of exchanges that shuttered after the fall.
The Celsius token dropped 8% on the news, as consumers, indebted investors, and Twitter responded with the idea that he would join Luna founder Do Kwon in “not hiding.”
Mashinsky did not respond to Fintech Nexus for an email request for comment by the time of publishing.
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