- Mashinsky personally directed individual trades.
- Celsius was given the bargain to get out of the lost trade.
- For nearly a month, the cryptocurrency market continued to move sideways.
Before a forthcoming US Federal Reserve meeting in January, Celsius Network CEO Alex Mashinsky assembled his investment team and informed them that he would be taking over the crypto lender’s trading strategy. The former telecoms entrepreneur claimed that because prices of well-known cryptocurrencies like bitcoin and ether had dropped from all-time highs, Celsius needed to take precautions against additional drops. He was confident that a hawkish decision would cause a drop in cryptocurrency prices.
In an effort to shield Celsius from expected falls in the cryptocurrency market, Mashinsky reportedly personally oversaw individual trades and disregarded the advice of financial professionals. In one incident, the CEO of Celsius reportedly instructed the selling of Bitcoin (BTC) worth “hundreds of millions of dollars,” repurchasing the coins less than 24 hours later at a loss.
Mashinsky allegedly caused his work relationship with Frank van Etten, Celsius’s then-chief investment officer, to suffer as a result of his conduct. The two allegedly “clashed often” over trading tactics. The Celsius CEO “had a high belief of how severely the market may swing south,” a source familiar with the situation told the Financial Times, and he encouraged staff to “start minimizing risk” in whatever manner they could before the Fed meeting.
Mashinsky reportedly turned down a bargain offered to Celsius to get out of the losing trade because he thought the discount would eventually get smaller. At a 25% discount, when GBTC was trading, the firm eventually decided to close the position.
According to people with knowledge of the situation, the business lost between $100 million and $125 million on the GBTC trade alone. The Financial Times report follows news that Mashinsky is being looked into by a committee of unsecured creditors who allege that the CEO of Celsius regularly misled clients regarding the security of their money and the company’s business strategy.
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