news4global
  • Home
  • Bitcoin
  • Blockchain
  • Business
  • Latest news
  • Market
  • Regulation
  • VideosHot
    Emergency – 100X Crypto coin just abi – jaldi karo #bitcoin #cryptocurrency

    Emergency – 100X Crypto coin just abi – jaldi karo #bitcoin #cryptocurrency

    FTM Fantom Crypto Price News Today – Elliott Wave Technical Analysis Update and Price Now!

    FTM Fantom Crypto Price News Today – Elliott Wave Technical Analysis Update and Price Now!

    BREAKING: COINBASE AND BLACKROCK ARE SENDING PEPE COIN TO $0.01 – EXPLAINED – PEPE COIN NEWS TODAY

    BREAKING: COINBASE AND BLACKROCK ARE SENDING PEPE COIN TO $0.01 – EXPLAINED – PEPE COIN NEWS TODAY

    Polkadot DOT Price News Today – Technical Analysis Update Now, Price Now! Elliott Wave Analysis!

    Polkadot DOT Price News Today – Technical Analysis Update Now, Price Now! Elliott Wave Analysis!

    The Market On The Edge: Gareth Soloway's Shocking Revelation

    The Market On The Edge: Gareth Soloway's Shocking Revelation

    What Is a Trading Strategy || Guide to Cryptocurrency Trading Strategy for Beginners

    What Is a Trading Strategy || Guide to Cryptocurrency Trading Strategy for Beginners

    Polygon MATIC Price News Today – Elliott Wave Technical Analysis Update, This is Happening Now!

    Polygon MATIC Price News Today – Elliott Wave Technical Analysis Update, This is Happening Now!

    Injective Protocol INJ Coin Price News Today – Elliott Wave Technical Analysis and Price Prediction!

    Injective Protocol INJ Coin Price News Today – Elliott Wave Technical Analysis and Price Prediction!

    Cardano ADA Price News Today – Elliott Wave Technical Analysis and Price Now! Price Prediction!

    Cardano ADA Price News Today – Elliott Wave Technical Analysis and Price Now! Price Prediction!

No Result
View All Result
  • Home
  • Bitcoin
  • Blockchain
  • Business
  • Latest news
  • Market
  • Regulation
  • VideosHot
    Emergency – 100X Crypto coin just abi – jaldi karo #bitcoin #cryptocurrency

    Emergency – 100X Crypto coin just abi – jaldi karo #bitcoin #cryptocurrency

    FTM Fantom Crypto Price News Today – Elliott Wave Technical Analysis Update and Price Now!

    FTM Fantom Crypto Price News Today – Elliott Wave Technical Analysis Update and Price Now!

    BREAKING: COINBASE AND BLACKROCK ARE SENDING PEPE COIN TO $0.01 – EXPLAINED – PEPE COIN NEWS TODAY

    BREAKING: COINBASE AND BLACKROCK ARE SENDING PEPE COIN TO $0.01 – EXPLAINED – PEPE COIN NEWS TODAY

    Polkadot DOT Price News Today – Technical Analysis Update Now, Price Now! Elliott Wave Analysis!

    Polkadot DOT Price News Today – Technical Analysis Update Now, Price Now! Elliott Wave Analysis!

    The Market On The Edge: Gareth Soloway's Shocking Revelation

    The Market On The Edge: Gareth Soloway's Shocking Revelation

    What Is a Trading Strategy || Guide to Cryptocurrency Trading Strategy for Beginners

    What Is a Trading Strategy || Guide to Cryptocurrency Trading Strategy for Beginners

    Polygon MATIC Price News Today – Elliott Wave Technical Analysis Update, This is Happening Now!

    Polygon MATIC Price News Today – Elliott Wave Technical Analysis Update, This is Happening Now!

    Injective Protocol INJ Coin Price News Today – Elliott Wave Technical Analysis and Price Prediction!

    Injective Protocol INJ Coin Price News Today – Elliott Wave Technical Analysis and Price Prediction!

    Cardano ADA Price News Today – Elliott Wave Technical Analysis and Price Now! Price Prediction!

    Cardano ADA Price News Today – Elliott Wave Technical Analysis and Price Now! Price Prediction!

No Result
View All Result
news4global
No Result
View All Result
Home Blockchain

Alex Mashinsky took control of Celsius trading strategy months before bankruptcy

August 16, 2022
Reading Time: 9 mins read
0
Alex Mashinsky took control of Celsius trading strategy months before bankruptcy
189
SHARES
1.5k
VIEWS
Share on FacebookShare on Twitter

Related articles

Bitcoin pro traders warm up the $24K level, suggesting that the current BTC rally has legs – Cointelegraph

Shutdown Crypto-Funded Fentanyl Trade: US Senator Elizabeth … – CoinGape

May 31, 2023
Bitcoin pro traders warm up the $24K level, suggesting that the current BTC rally has legs – Cointelegraph

BRC-20 Tokens Surge: Explore the Hottest Projects Harnessing the … – BSC NEWS

May 31, 2023

In January, Celsius Network boss Alex Mashinsky gathered his investment team to tell them he would be taking control of the crypto lender’s trading strategy ahead of an upcoming US Federal Reserve meeting.

Prices of popular cryptocurrencies such as bitcoin and ether had fallen from their all-time highs and the former telecoms entrepreneur said Celsius needed to protect itself from further declines. A hawkish outcome, he was convinced, could crash crypto prices.

In the days before the Fed met, Mashinsky personally directed individual trades and overruled executives with decades of finance experience, according to multiple people familiar with the matter.

In one case, Mashinsky ordered the sale of hundreds of millions of dollars’ worth of bitcoin, refusing to wait to double check Celsius’s often unreliable information on its own holdings. Celsius — which at the time held $22bn of customer crypto assets — bought the bitcoin back a day later at a loss.

“He was ordering the traders to massively trade the book off of bad information,” one of the people said. “He was slugging around huge chunks of bitcoin.”

Another person familiar with the events said that while Mashinsky may have been making his views known based on his knowledge of crypto markets, they insisted “he was not running the trading desk”.

Mashinsky’s fears were not borne out in the short term. The Fed confirmed plans to raise rates and crypto markets shrugged. Celsius made $50mn of trading losses in January, some of the people said, though it is not clear how much was attributable to Mashinsky.

The previously unreported events highlight the fraught internal dynamics at Celsius in the months leading up to its July bankruptcy filing, including its weak systems for tracking assets, Mashinsky’s fears about a downturn, and his willingness to directly involve himself in trading decisions, unlike typical chief executives of large financial institutions.

Recommended

Celsius built itself up by accepting crypto from its customers and promising them eye-popping returns it generated through deploying the tokens in digital asset markets. Its hundreds of thousands of clients now face significant losses on the crypto they entrusted to the company, which has a $1.2bn hole in its balance sheet.

Mashinsky and Celsius’s lawyers Kirkland & Ellis have told the court in New York that the company was pushed into bankruptcy not by mismanagement but by the broader collapse this year in crypto asset prices. Lawyers representing Celsius’s unsecured creditors, overwhelmingly its customers, have vowed to investigate Mashinsky’s conduct.

An attorney for Mashinsky declined to comment. Celsius and its lawyers at Kirkland did not respond to a request for comment. In a filing to the bankruptcy court last month, Mashinsky said Celsius’s assets had grown faster than its ability to invest them and acknowledged it “made what, in hindsight, proved to be certain poor asset deployment decisions”.

‘High conviction’ trade

At the start of the year, Celsius had the outward confidence of a business that had just completed a $600mn equity fundraising round led by two big investors, Canada’s second-largest pension fund Caisse de dépôt et placement du Québec and US investment group WestCap.

The funding round in December 2021 had valued Celsius at $3bn. The fast-growing lender, founded in 2017, boasted that it was hiring “traditional finance executives”. But problems were bubbling under the surface.

Though Mashinsky claimed Celsius’s business of taking in crypto deposits and lending them out was safe — he insisted publicly it did not trade customer assets — the company had suffered big losses of crypto tokens it had not disclosed to customers.

One incident involved a US-based lender called EquitiesFirst, which in July 2021 had been unable to immediately return $500mn worth of bitcoin Celsius had pledged to secure a loan, Mashinsky told the bankruptcy court last month.

Another, not previously reported, involved a sizeable investment in the Grayscale Bitcoin Trust, the world’s largest bitcoin fund whose GBTC units offered investors a tradeable product that tracked the digital token.

Celsius had bought into GBTC when it traded at a premium to the underlying bitcoin in the fund. By September 2021, Celsius held 11mn GBTC, then worth about $400mn but trading at a 15 per cent discount to the trust’s net asset value.

Celsius was offered a deal to exit the position that month that would have cut the company’s losses, but Mashinsky blocked the sale, arguing that the discount might narrow, according to two people familiar with the matter. Instead it worsened. Celsius would not completely unwind its position until half a year later in April, when the discount was 25 per cent.

The company’s total losses on its GBTC trade were about $100mn to $125mn, according to one of the people familiar with the matter.

Line chart of $ per coin showing Bitcoin prices ticked up after January Federal Reserve meeting

Celsius had plugged its losses in part by borrowing from other crypto ventures. It pledged crypto tokens it held as security for loans of stablecoins — the equivalent of dollars in crypto — that it would use to buy crypto assets to replace those it had lost, several people familiar with the matter said.

These arrangements left Celsius vulnerable if crypto prices fell sharply. Customers might demand their crypto back at the same time that Celsius had to send more to its lenders as additional collateral for its stablecoin borrowings.

The company would have little of its own cash to fall back on in such a situation. Celsius had been paying out more in interest to customers on tokens such as bitcoin and ether than it generated through its investments, according to people familiar with the matter. And it invested much of the $600mn it raised from investors led by CDPQ and WestCap into its capital-intensive crypto mining business and the acquisition of an Israeli start-up, Kirkland told the bankruptcy court last month.

On Sunday, Celsius disclosed that its current monthly net cash flow was significantly negative. Between August and October, the company estimated it would lose $137mn, largely attributable to its mining business. The figures included $33mn of restructuring costs.

Balance sheet figures previously disclosed in the bankruptcy proceedings showed that as early as March this year Celsius’s liabilities were greater than its assets but for holdings of its own digital token CEL. Two people familiar with the matter said that had been the situation since 2021.

In January 2022, it seemed a moment of crisis had arrived. The company had been taking losses for much of the month with the downturn in crypto prices. On a call on January 21, the Friday preceding the Fed meeting, Mashinsky told his investment team that the coming week would be the most defining of their careers.

“He had a high conviction of how bad the market could move south. He wanted us to start cutting risk however Celsius could,” said one of the people familiar with the events. Not everyone agreed.

Over the coming days, Mashinsky clashed repeatedly with his then-chief investment officer, Frank van Etten, a former Nuveen and UBS executive, over what trades Celsius should make, but also over Mashinsky involving himself in such decisions.

Van Etten, who had joined in September 2021, left in February this year, according to his LinkedIn entry. Mashinsky in a January 14 press release cited his arrival at Celsius as an example of “top tier talent” joining the company. Van Etten said he was not in a position to comment at this time.

Cryptofinance

Critical intelligence on the digital asset industry. Explore the FT’s coverage here.

The sale and then buyback of bitcoin Mashinsky ordered came just a day or two before the Fed meeting. One reason he had been pushing for Celsius to sell was linked to the issue with EquitiesFirst in 2021.

EquitiesFirst owed Celsius bitcoin and Celsius had hedged that exposure by buying bitcoin ahead of repayment. Mashinsky argued that EquitiesFirst might pay back its bitcoin debt faster as prices fell.

If that happened, Celsius would have more bitcoin than it currently forecast. It usually tried to maintain a neutral position on its crypto holdings to balance assets and liabilities. By selling bitcoin now before prices dropped, Celsius could profit, Mashinsky reasoned.

“It was not an irrational thought,” another of the people familiar with the events said, but there simply wasn’t evidence EquitiesFirst would repay any faster. “There was a lot of speculation,’ they added.

EquitiesFirst said: “We entered into an agreement well before the January date mentioned. Any alteration to that agreement would have required consensus from all parties.” The company added it would satisfy all its obligations to Celsius.

Mashinsky’s fears about the market proved to be at least poorly timed. While the Fed confirmed plans to increase rates in March, there was no collapse in crypto prices until May. Indeed, the bitcoin price rallied in the weeks after the January Fed meeting.

An internal audit report was subsequently presented to the board and Celsius investors WestCap and CDPQ in February that recommended accelerating investments in the company’s technology. WestCap and CDPQ declined to comment.

The report noted the audit was requested by Mashinsky. It covered the period January 1 to January 21, according to two people familiar with the matter. It is unclear why the audit did not include the trading immediately before the Fed meeting.

The Celsius employee who led the internal audit, a former banker with almost two decades of internal audit and controls experience, was shortly after moved to work on new commercial product and partnership ideas.

Video: The ongoing battle to beat crypto thieves | FT Tech

Click here to visit Digital Assets dashboard

Share76Tweet47

Related Posts

Bitcoin pro traders warm up the $24K level, suggesting that the current BTC rally has legs – Cointelegraph

Shutdown Crypto-Funded Fentanyl Trade: US Senator Elizabeth … – CoinGape

by admin
May 31, 2023
0

Shutdown Crypto-Funded Fentanyl Trade: US Senator Elizabeth ...  CoinGape

Bitcoin pro traders warm up the $24K level, suggesting that the current BTC rally has legs – Cointelegraph

BRC-20 Tokens Surge: Explore the Hottest Projects Harnessing the … – BSC NEWS

by admin
May 31, 2023
0

BRC-20 Tokens Surge: Explore the Hottest Projects Harnessing the ...  BSC NEWS

Bitcoin pro traders warm up the $24K level, suggesting that the current BTC rally has legs – Cointelegraph

Analysis | Mighty Dollar Can Fight Off the Digital Upstarts – The Washington Post

by admin
May 30, 2023
0

Analysis | Mighty Dollar Can Fight Off the Digital Upstarts  The Washington Post

Bitcoin pro traders warm up the $24K level, suggesting that the current BTC rally has legs – Cointelegraph

Ripple (XRP) Price Prediction, Render (RNDR) and Tradecurve … – Crypto News Flash

by admin
May 30, 2023
0

Ripple (XRP) Price Prediction, Render (RNDR) and Tradecurve ...  Crypto News Flash

Bitcoin pro traders warm up the $24K level, suggesting that the current BTC rally has legs – Cointelegraph

Biden and McCarthy Express Optimism About Timely Passage of … – Cryptonews

by admin
May 29, 2023
0

Biden and McCarthy Express Optimism About Timely Passage of ...  Cryptonews

Load More
  • Trending
  • Comments
  • Latest

Bitcoin Is ‘Definitely Not a Fraud,’ CEO of Mobile-Only Bank Revolut Says

March 2, 2022

Bitcoin’s Main Rival Ethereum Hits A Fresh Record High: $425.55

March 3, 2022
How online shopping has changed over the last 30 years | National

How online shopping has changed over the last 30 years | National

April 6, 2022
Protocon Announces ‘Contract Model’, an Alternative

Protocon Announces ‘Contract Model’, an Alternative

April 6, 2022

US Commodities Regulator Beefs Up Bitcoin Futures Review

0

Bitcoin Hits 2018 Low as Concerns Mount on Regulation, Viability

0

India: Bitcoin Prices Drop As Media Misinterprets Gov’s Regulation Speech

0

Bitcoin’s Main Rival Ethereum Hits A Fresh Record High: $425.55

0
Joymiso Tangle Free Earbuds for Kids Women Small Ears with Case, Comfortable Lightweight in Ear Headphones, Flat Cable Ear Buds Wired Earphones with Mic and Volume Control for Cell Phone Laptop (Blue)

Joymiso Tangle Free Earbuds for Kids Women Small Ears with Case, Comfortable Lightweight in Ear Headphones, Flat Cable Ear Buds Wired Earphones with Mic and Volume Control for Cell Phone Laptop (Blue)

June 1, 2023
Cubilux USB C Mic Splitter for TRRS Lav Microphone,TRRS Headphone Mic with Mic Monitoring,Type C to 3.5mm Microphone Splitter Suitable for Recording-USB C Support Android,Ipad OS,Mac OS,Window etc

Cubilux USB C Mic Splitter for TRRS Lav Microphone,TRRS Headphone Mic with Mic Monitoring,Type C to 3.5mm Microphone Splitter Suitable for Recording-USB C Support Android,Ipad OS,Mac OS,Window etc

June 1, 2023
ASTRO Gaming A10 Headset for Xbox One/Nintendo Switch / PS4 / PC and Mac – Wired 3.5mm and Boom Mic w/Velvet Pouch Bag – Bulk Packaging – (Blue/Black)

ASTRO Gaming A10 Headset for Xbox One/Nintendo Switch / PS4 / PC and Mac – Wired 3.5mm and Boom Mic w/Velvet Pouch Bag – Bulk Packaging – (Blue/Black)

June 1, 2023
Bluetooth Headphones True Wireless Earbuds 48Hrs Playtime with Wireless Charging Case LED Power Display Wireless & Type-C Charging Waterproof in-Ear TWS Earphones for Phone Computer Laptop Sports

Bluetooth Headphones True Wireless Earbuds 48Hrs Playtime with Wireless Charging Case LED Power Display Wireless & Type-C Charging Waterproof in-Ear TWS Earphones for Phone Computer Laptop Sports

June 1, 2023

Latest News

Joymiso Tangle Free Earbuds for Kids Women Small Ears with Case, Comfortable Lightweight in Ear Headphones, Flat Cable Ear Buds Wired Earphones with Mic and Volume Control for Cell Phone Laptop (Blue)

Joymiso Tangle Free Earbuds for Kids Women Small Ears with Case, Comfortable Lightweight in Ear Headphones, Flat Cable Ear Buds Wired Earphones with Mic and Volume Control for Cell Phone Laptop (Blue)

June 1, 2023
Cubilux USB C Mic Splitter for TRRS Lav Microphone,TRRS Headphone Mic with Mic Monitoring,Type C to 3.5mm Microphone Splitter Suitable for Recording-USB C Support Android,Ipad OS,Mac OS,Window etc

Cubilux USB C Mic Splitter for TRRS Lav Microphone,TRRS Headphone Mic with Mic Monitoring,Type C to 3.5mm Microphone Splitter Suitable for Recording-USB C Support Android,Ipad OS,Mac OS,Window etc

June 1, 2023

Categories

Site Navigation

  • Home
  • About us
  • Contact us
  • Privacy policy
  • Terms and services
  • Home
  • About us
  • Contact us
  • Privacy policy
  • Terms and services

© 2022 Designed by news4global

No Result
View All Result
  • Home
  • Bitcoin
  • Blockchain
  • Business
  • Latest news
  • Market
  • Regulation
  • Videos

© 2022 Designed by news4global