Top Executives Withdrew $17M In Crypto Before Celsius’ Bankruptcy

The senior executives of crypto lender Celsius took slightly more than $17 million in bitcoin between May and June 2022, just before the firm suspended withdrawals and filed for bankruptcy.

According to a Statement of Financial Affairs late Wednesday, former CEO Alex Mashinsky and former CSO Daniel Leon mostly took the cash in the form of bitcoin (BTC), ether (ETH), USDC (USDC), and CEL tokens from custodial accounts (CEL). Over a dozen other executives, including the company’s Chief Compliance Officer, Oren Blonstein, Chief Risk Officer, Rodney Sunada-Wong, and the new CEO, Chris Ferraro, did not make any significant withdrawals during this period.

In May 2022, Mashinsky withdrew around $10 million in cryptocurrencies. Between May 27 and May 31, Leon pulled out around $7 million and a further $4 million worth of CEL designated as “collateral.”

Initially, it looked like the current CTO, Nuke Goldstein, took around $13 million, with an additional $7.8 million worth of CEL representing collateral. However, similar transactions through multiple connected organisations imply that Goldstein shifted his shares to and from separate Celsius accounts. Approximately $550,000 was withdrawn from his account, predominantly in ETH. On May 9, 11, 13, and 25, Bits of Sunshine LLC, a Goldstein-affiliated entity, took away $5,7 million in CEL from a custody account. Most of the funds were also moved to his personal Celsius account, which he pledged as collateral.

never forget that @celsiusnetwork had a cto named nuke goldstein who rugged the hell out of millions

— Mike Dudas (@mdudas) October 6, 2022

i delete my tweets once per week

from now on, i’ll be referring to these moments as “nuke goldsteins”

— Mike Dudas (@mdudas) October 6, 2022

Celsius filed for Chapter 11 bankruptcy protection in July, one month after suspending all customer withdrawals due to extreme market conditions.

The documents on Wednesday represent the most recent step in the crypto lender’s bankruptcy case. The U.S. Trustee’s office has hired an independent examiner to investigate why Celsius failed and how it managed and kept client money.

Mashinsky and Leon resigned from their lender positions during the past two weeks. The Financial Times claimed that Mashinsky took $10 million in cryptocurrency before Celsius’ withdrawal suspension.

According to leaked audio recordings, key members of the lender’s management discussed new restructuring plans that included converting the company’s debt into tokens and a possible move to crypto custody. Nonetheless, the court will hold an auction of Celsius’s assets later this month.

The bankruptcy court ordered Celsius to provide regular updates to the Unsecured Creditors Committee (UCC), which represents all customers to whom Celsius owes assets, about its financial status and cash management.

The lender has to publish its monthly budget and cash balance, expenditure on labour and taxes, among other numbers, as well as performance indicators about its bitcoin mining operation and any profits from the sale of BTC generated by the company’s mining facilities.

Additionally, the company must seek UCC approval for “critical vendor payment” exceeding $50,000.

The subsequent bankruptcy hearing is slated for later this week, on October 7 at 10 a.m. E.T.