Unbanking the unbanked: Celsius founder Alex Mashinsky withdrew $10 million before the company filed for bankruptcy

In the weeks leading up to Celsius Network’s Chapter 11 bankruptcy protection filing, Celsius founder and former CEO Alex Mashinsky withdrew $10 million, according to a report from The Financial Times (FT), citing sources familiar with the matter. The revelation comes just a week after Mashinsky resigned as the company’s CEO.

According to FT, Mashinsky made the withdrawals weeks before the company froze customer accounts as it spiraled towards bankruptcy. On June 11, Celsius, the company that promised to provide banking access to millions of the unbanked, froze all withdrawals and transfers for all of its customers, leaving 1.7 million customers and retail investors unable to access their savings. Celsius said it paused all withdrawals, Swaps, and transfers between accounts due to “extreme market conditions.”

Celsius is set to submit the details of Mashinsky’s withdrawals in court in the coming days as part of a broader disclosure by the company of its financial affairs, Financial Times reported.

A spokesperson for Mashinsky told the Financial Times that he and his family still had $44 million of crypto assets frozen with Celsius even after the withdrawals, which he had voluntarily disclosed to the official unsecured creditors’ committee (UCC) in the bankruptcy proceedings.

“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 totaled what he withdrew in May,” the spokesperson said.

“He continues to be committed to working with and uniting the community around a recovery plan that will maximize coin and liquidity for all,” they added.

Mashinsky, 56, co-founded Celsius in 2017 with S. Daniel Leon to enable consumers to earn interest on their cryptos and instantly borrow against them. The five-year-old cryptocurrency lending platform offers crypto investors higher-than-average interest rates on their deposits.

As of May, Celsius lent out more than $8 billion to clients and almost $12 billion in assets under management, its website said, down by more than half from October, and had processed a total of $8.2 billion worth of loans.

Mashinsky was the public face of the company before the company filed for banruptcy. He appeared in weekly video addresses on YouTube where he pushed his message of “financial liberation from the banking establishment” He’s known for wearing a T-shirt that reads: “Banks are not your friends.”

This is not Mashinsky’s failed business despite calaiming to have a lot of experience. According to a 1999 article referenced on The US Securities and Exchange Commission (SEC) website, Alex “tried importing urea from Russia, selling Indonesian gold to Switzerland and brokering poisonous sodium cyanide excavated in China for use by gold miners in the U.S.”

“He [Alex] tried importing urea from Russia, selling Indonesian gold to Switzerland and brokering poisonous sodium cyanide excavated in China for use by gold miners in the U.S. The cyanide business collapsed in 1989 as Mashinsky watched the Tiananmen Square crackdown on CNN.”

These businesses eventually failed and Alex pivoted. That was not all. According to Alex’s own personal website, Alex claimed to be “the founder of eight startups and three Unicorns.” He also claimed to have invented voice-over internet protocol (VOIP) technology.