Mashinsky steps down as head of Celsius Network

Crypto lender Celsius Network head Alex Mashinsky resigned on Tuesday with an apology to customers for the “difficult financial circumstances” the company’s bankruptcy left her in.

Celsius filed for bankruptcy protection in July and said it had a $1.2 billion hole in its balance sheet, making it one of the high-profile victims of the crypto markets crash earlier this year.

The lender has hundreds of thousands of customers who deposited crypto with the company, which has promised double-digit interest rates on some assets, and are now facing significant losses on their savings.

The sudden resignation comes two months after bankruptcy proceedings began, which have yet to clarify for Celsius customers when and how much of their money they can get back.

“I regret that my continued role as CEO has become increasingly distracting, and I am deeply sorry for the difficult financial circumstances that members of our community are facing,” Mashinsky said in a letter to the Celsius Board of Directors. (He remains a director of the Celsius parent company.)

Mashinsky, a former telecoms entrepreneur who founded Celsius in 2017, added that he is committed to helping Celsius “develop and promote” a plan for the company to acquire assets “in the fairest and most efficient manner.” return the creditors.

In recent weeks, leaked internal meetings at Celsius have indicated that the company may propose a reorganization that would see customers receive a crypto token replacement for their claims while launching a new business based on providing custodian services for crypto.

The collapse of Celsius earlier this year rocked the crypto markets. It became the first major crypto company to freeze customer accounts in June, kickstarting a market crisis that crushed several digital asset startups.

Rival crypto broker Voyager Digital, another company that offered interest on crypto tokens, also went bankrupt. On Tuesday, Voyager said it had agreed to sell its assets to FTX US, the crypto exchange run by Sam Bankman-Fried.

Mashinsky was heavily criticized as a result of the bankruptcy, and disgruntled customers filed letters with the court alleging they had been misled during the weekly YouTube appearances he used to promote Celsius.

The complaints were echoed by Vermont’s state securities commission, which claimed in a court filing that Celsius operated what might have resembled a Ponzi scheme for at least two years before its collapse.

Celsius was backed by two large blue-chip investors, WestCap and Caisse de dépôt et Placement du Québec, Canada’s second-largest pension fund, which led a $600 million funding round late last year.

In July, CDPQ wrote off its $150 million investment in Celsius, acknowledging that it got into crypto “too soon.”