Was Celsius Network CEO Planning for This Resignation Long?

Here’s How Alex Mashinsky, CEO of bankrupt cryptocurrency lender Celsius Network, resigns.

Alex Mashinsky, the CEO of Celsius Network, resigned from his position, months after the cryptocurrency company filed for Chapter 11 bankruptcy protection. Although Mashinsky's resignation was effective immediately, he stated in his resignation letter that he would continue to work with the company to ensure creditors received the best solution. According to CoinMarketCap, the value of Celsius Network's cryptocurrency, the CEL token, fell 7% after Mashinsky announced his resignation, despite the company being the market leader with over $8 billion in loans and $12 billion in assets in May. Due to a massive liquidity crunch in June, the company was forced to halt withdrawals, causing other businesses' assets to be frozen due to the market crash. Three of them declared bankruptcy.

"I have decided to resign as CEO of Celsius Network today," Mashinsky said. "However, I will continue to work to help the community unite behind a plan that will provide the best outcome for all creditors - as I have done since the company filed for bankruptcy," he added. Celsius was among the first in a long list of cryptocurrency companies to succumb to the pressures of this year's bear market. Following the collapse of the Terra ecosystem, which saw $60 billion in value evaporate in May, the lender began to feel the pinch. Celsius took action in June by freezing withdrawals before declaring bankruptcy a month later.

Following the announcement, the native CEL token of Celsius is trading 8% lower. Mashinsky's removal from the company has been requested by the Official Committee of Unsecured Creditors, a group of former Celsius customers acting as liaisons for the company's bankruptcy case. "Based on the information it has reviewed, the Committee believes that Mr. Ferraro is capable of overseeing the Debtors' assets and affairs and looks forward to furthering dialogue with Mr. Ferraro, the Special Committee, and the Debtors' advisors regarding the next phase of the restructuring process," the group said in a statement filed in bankruptcy court on Tuesday. According to the report, the committee may also try to sue Mashinsky for any damages they believe he owes.

As crypto markets crashed in mid-June this year, Celsius was one of the first major crypto lenders to freeze user withdrawals. Following weeks of silence, the company filed for bankruptcy, revealing a $1.2 billion dollar hole in its balance sheet. On-chain data revealed that Celsius was hastily repaying money on its various DeFi loans in order to avoid being liquidated on over $440 million in collateralized Bitcoin prior to the bankruptcy filing. The company eventually paid off the loan and recovered the funds.

Since then, the company has been granted permission to sell its mined Bitcoin in order to fund its operations. Although its operations were losing money in July, a New York judge determined that the move would benefit investors in the long run. Vermont officials claimed earlier this month that Celsius has been secretly insolvent since 2019 and that CEO Alex Mashinsky made false and misleading statements to exaggerate the firm's financial health.