Celsius' bankruptcy court documents revealed that the crypto lending company’s top executives had withdrawn at least $30 million worth of cryptocurrencies in May. Later in June, the lender suspended withdrawals for users on its platform.
Celsius CEO Alex Mashinsky reportedly withdrew around $10 million in crypto tokens throughout May, while former CTO Nuke Goldstein drew $13 million. However, Goldstein's legal representatives claimed that his net deposits totaled $559,000.
Celcius co-founder Daniel Leon allegedly withdrew around $7 million. The total calculations shown by court filings include withdrawals by parties linked to these executives. Transactions were carried out using BTC, ETH, USDC, wrapped BTC and its native token, CEL.
According to Celsius advisors, some of the reported withdrawals might be transfers from one type of Celsius account to another. The advisors said they continued to analyze whether these withdrawals could potentially lead to a lawsuit.
The judge presiding over the case, Martin Glenn, recently tasked an examiner to explore these misconduct allegations against the company and its top executives.
Celsius investors sent letters to Judge Glenn, requesting assistance with refunds. Many of them told the judge that they had invested their life savings in the now-defunct company and became unable to pay for necessities.
Alexander Simmons, a British investor, said he successfully made his latest deposit on June 8 despite Celsius knowing "they had been about to dam withdrawals on June 13, 2022.”
“So why hold permitting deposits?” Simmons wrote in his letter. “This, for my part, is certainly an act of fraud.”
Celsius requested bankruptcy protection in July, a month after halting withdrawals. The company explained that the move was an effort to stabilize its condition.
“That is the precise determination for our neighborhood and firm,” Mashinsky said at that time.
“I’m assured that once we look again on the historical past of Celsius, we are going to see this as a defining second, the place appearing with resolve and confidence served the neighborhood and strengthened the way forward for the corporate.”
In a statement, Mashinsky acknowledged that the company had made “certain poor asset deployment decisions." Celsius lent 35,000 units of ETH to StakeHound, who lost the fund due to a third-party error. The company also made two secured loans in 2019 and 2021 but found out that the lender could not return its collateral upon payment.
This situation was further worsened by the crypto winter plaguing the industry. Although several tokens reached their all-time highs last year, the market valuations soon went down. Other crypto companies also declared bankruptcy, including Three Arrows Capital and Voyager.
Going public in 2017, Celsius was one of the most prominent lending companies in the crypto industry. Before going bankrupt, the company had served 1.7 million clients across the globe.
Celsius reported a $1.2 billion deficit on its balance sheet. Its court filings also showed that the company had $4.3 billion in assets against $5.5 billion in liabilities. It owed a total of $4.7 billion to investors.
Borrowers reportedly owed $439 million to Celsius, $361 in cash, while the rest was in BTC. Last month, the lending company said that it would not seek repayments for outstanding debts from borrowers.