Just over two months after Celsius Network – which has strong ties to Tampa – filed for Chapter 11 bankruptcy, its embattled CEO announced his immediate resignation.
Alex Mashinsky, CEO of the crypto lending behemoth, announced his immediate resignation in a Tuesday release. He is also stepping down from directorships and other positions with the company’s direct and indirect subsidiaries. However, the letter stated he would maintain his role as director at Celsius Network Ltd.
“I regret that my continued role as CEO has become an increasing distraction, and I am very sorry about the difficult financial circumstances members of our community are facing,” said Mashinsky in the letter. “Since the pause, I have worked tirelessly to help the company and its advisor put forward a viable plan for the company to return coins to creditors in the fairest and most efficient way.”
As with previous stories, a Celsius spokesperson did not respond to a request for comment.
The “pause” Mashinsky referred to was a June halt on withdrawals, swaps and transfers between accounts. The former crypto lending giant – which opened a Tampa office in September 2021 – cited “extreme market conditions” at the time.
Celsius has not restored those functions over three months later, with bankruptcy proceedings further casting doubt on whether thousands of customers will ever receive their money or cryptocurrency. Before the pause, the company claimed it had a user base of 1.7 million people seeking high yields of up to 18% on deposits.
As of May, Celsius issued more than $8 billion in client loans and managed nearly $12 billion in assets. Customers would deposit cryptocurrency, which the firm lent to counterparties willing to pay exorbitant interest rates to borrow it. The company would then split some of that revenue with its platform’s users.
The firm’s slogan is “unbank yourself,” an enticing proposition as it offered returns and access to loans not typically found at traditional institutions.
According to its website, the lender employed “military-grade security” and “next-level transparency.” Subsequent lawsuits and bankruptcy filings highlighted how both statements – especially the latter – were utterly false.
Celsius filed for bankruptcy in July amid an industry-wide liquidity crisis and market crash, and there appears to be little hope for customers on the horizon. At the time, Georgetown law professor Adam Levitin told CNBC that Celsius users may have to wait years to get their money back.
Even then, he said they could receive just pennies on the dollar. However, Mashinsky – who relayed no internal troubles in a June 10 “Ask Me Anything” session, just three days before suspending withdrawals – remained optimistic in his resignation letter.
“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,” he said.
“I believe we all will get more if Celsians stay united and help the UCC (Unsecured Creditors Committee) with the best recovery plan.”
The company’s cryptocurrency, the CEL token, dropped over 7% in value following the announcement, according to CoinMarketCap.
In May 2021, Nuke Goldstein, a co-founder of Celsius, moved to Tampa and became enamored with the region’s potential as a burgeoning tech and blockchain hub. The company opened a Tampa office in September 2021, and he announced plans to hire 100 employees to operate out of its downtown location.
Goldstein was at the center of leaked audio shared with CNBC, which explained how Celsius wants to issue an “IOU” cryptocurrency to customers that signed up for some of its accounts. CNBC verified the recording’s authenticity.
According to the report, the tokens “represent the ratio between what Celsius owes customers and what assets they have available.”
In a filing with the bankruptcy court, the UCC wrote that the CEO’s resignation “is a positive step that will allow the debtors, the committee, and all other stakeholders to focus on moving these cases forward in a prompt and efficient manner.”
The filing further states that “the Committee also concluded that any restructuring plan associated with Mr. Mashinsky would likely face significant challenges.” The UCC also demanded that Celsius Network special committee “remove Mr. Mashinsky as CEO and take other steps necessary to support an orderly transition.”
However, the embattled CEO reiterated his willingness to work with Celsius and its advisors “to achieve a successful reorganization.”
“I am committed to helping the company continue to flesh out and promote that plan in order to help account holders become whole,” said Mashinsky.