For several weeks now, the cryptocurrency platform Celsius has not stopped making news. Bad news, unfortunately for users who had confidence in CEO Alex Mashinsky.
As a reminder, Celsius has swept away shortly after the collapse of the UST and the Terra ecosystem. Since then, the embers of the fire have struggled to cool. Courts, impoverished users, and the kindling brought to the blazing fuel the fire.
Celsius losses approach $3 billion
This time, it's a new report that's setting Celsius Network on fire. According to The Block, Celsius' law firm, Kirkland & Ellis, has reported new figures. These have dropped, compared to those reported on July 14, 2022, when Celsius filed for bankruptcy, with the platform reporting a deficit of $1.2 billion.
The report explains that the company would be in a deficit of 2.85 billion dollars. This figure is more than double the amount declared by the cryptocurrency platform when it filed for bankruptcy.
Let's compare the few data provided to us a bit.
The latest report shows that the company has a liability balance of $6.6 billion. On the cryptocurrency side, Celsius reportedly had the equivalent of $3.8 billion in crypto assets under management. However, once again, these are not the figures reported by Celsius in its bankruptcy filing. The company would have reported $4.3 billion and $3.8 billion in crypto assets.
Celsius would have lost 62,853 BTC
The report also explains that out of the 100,669 BTC deposited by investors, the company would have lost 62,853 BTC, so Celsius would hold only 37,926 BTC.
The most impressive part of the report remains Celsius Network's debt spreads on DeFi. The crypto platform would thus own $348 million in BTC, but it would have the equivalent of $2.5 billion in loans. That gap is closing on the Ether side, but it's still $1 billion.
In its projections, the report of the consulting firm develops that, in this dynamic, the remaining 130 million dollars to Celsius would allow the platform to ensure its costs only until October 2022.
While the community is still trying to save the Celsius soldier, the company does not seem to be able to get out of the flames of the fire in which it is stuck.
The truth about Alex Mashinsky comes to light as word gets out
As if that wasn't enough, the truth about its CEO Alex Mashinsky is starting to come out. It makes sense because when things are going well, everyone focuses on the success story, but when things get complicated, the truth always comes out.
I had already highlighted the contradictions of Alex Mashinsky who was to release a book entitled “The Mashinsky Method: The Decentralized Path to Financial” at the end of 2022, while he announced in June 2022 the freezing of asset withdrawals from Celsius clients:
As always, you have to be wary of those people who preach big, enticing principles and then do something else entirely. I suggested on Twitter that his book be renamed: “The Alex Mashinsky Method: I own your Keys on CelsiusNetwork, I own your Bitcoin”.
Recently, several incredible pieces of information have been revealed.
We start with Alex Mashinsky who tried at the beginning of August 2022 to liquidate some CEL tokens, neither seen nor known. The magic of the Blockchain makes it obvious and impossible to hide the slightest movement of assets. Alex Mashinsky was quickly pinned on Twitter and then reported on Coindesk:
This is typically the kind of small accounting manipulation that tends to discredit an entire meandering file that is likely to remain in the news for years to come.
As I reminded you, Celsius users can no longer access their assets since June 15, 2022. We also know with relative precision what Mashinsky's holdings are in his own company's tokens, especially since a recent study by Arkham Intelligence showed that he was one of the main holders (and had sold them in the last few years for 44 million dollars, so think about that the next time a project asks you to be “strong” and “diamond hand”).
In the state of Celsius's bankruptcy proceedings, and a few days away from going to court, nothing probably prevents Alex Mashinsky from disposing of his tokens as he sees fit. However, we agree that we would expect the captain of a ship that is taking on water from all sides to stay at the helm, rather than to sneak in the few remaining lifebuoys.
And it is finally under this angle of morality that the movements noted on August 8, 2022, on the addresses of the CEO of Celsius call out. Indeed, Mashinsky (or whoever has control of the wallet) sold CEL tokens on several occasions. There are transactions exchanging 17,475 CEL tokens for $28,242 worth of ether (ETH) on the decentralized exchange UniSwap. These are the first movements since the end of May 2022 and the industrial disaster that hit the company.
To this total lack of morale, I will add a revelation made more recently by the Financial Times about the CEO of Celsius. According to sources close to the CEO, Alex Mashinky has taken over the trading of the company.
The revelation seems hardly believable but could shed further light on Celsius' internal dysfunction. In January 2022, Alex Mashinky allegedly gathered the investment team to inform them that he was now taking control of the trading strategy.
Mashinsky then took direct control of several trades made on behalf of Celsius. He thus bypassed the organizational chart and acted without the approval of his financial directors and qualified executive staff. Among other things, he sold several million dollars worth of BTC, ignoring the strategies already in place. Celsius recorded $50 million in losses that month, although it is still difficult to quantify the CEO's share of responsibility.
In any case, the Celsius case is not over and we are likely to learn more in the coming weeks. This should remind you of two essential lessons for your future investments, whether in the world of cryptocurrencies or traditional finance.
The first is that you should never be blinded by charismatic CEOs who promise you the best. Set your own goals, and stick to them. The second is directly related to the world of cryptocurrencies: you only own the assets you have the private keys to. Not your Keys, Not your Bitcoin, as I often tell you.
So be careful!