Mashinsky's representative said, “In mid to late May 2022, Mr Mashinsky withdrew a percentage of cryptocurrency in his account, much of which was used to pay state and federal taxes.”
Just weeks before the Celsius Network froze clients' accounts, CEO Alex Mashinsky withdrew $10 million from the crypto platform, according to Financial Times.
Mashinsky's crypto withdrawals in May this year coincided with the large-scale exit of customers from the company. This was caused by the general turbulence in the crypto markets and worries about Celsius's financial stability.
The defunct crypto lender froze withdrawals on June 12, preventing thousands of retail investors from accessing their savings. The company later filed for bankruptcy in July with $1.2 billion unaccounted for.
Customers were drawn to Celsius's business by its outrageous interest rates. Celsius offered rates as high as 18% on some cryptocurrencies. These “attractive” rates lured users into depositing up to $25 billion worth of crypto assets.
Mashinsky, who resigned as CEO, will come under closer scrutiny as a result of the withdrawal revelations. This may mean that he was aware that Celsius wouldn't be able to return customers' assets.
Celsius is scheduled to provide information about Mashinsky's transactions to the court in the upcoming days as part of a larger disclosure of the business financial affairs.
Meanwhile, Mashinsky’s representative claimed that aside from the withdrawn amount, the former CEO and his family still had $44 million frozen alongside clients' funds.
He said,
“In mid to late May 2022, Mr. Mashinsky withdrew a percentage of cryptocurrency in his account, much of which was used to pay state and federal taxes. In the nine months leading up to that withdrawal, he consistently deposited cryptocurrency in amounts that totalled what he withdrew in May.”
He concluded by saying that Mashinsky voluntarily disclosed the withdrawal to the Unsecured Creditor Committee (UCC) during the bankruptcy proceedings.
According to him, the former CEO remains committed to working and uniting the community. While doing this, Mashinsky pledged his dedication to finding a plan that will ensure users receive their funds.
