Alex Mashinsky, the Chief Executive Officer of Celsius Network, has resigned, with the Company’s CFO Chris Ferraro stepping up as the chief restructuring officer and interim CEO. The move comes months after the Company filed for Chapter 11 bankruptcy protection.
Celsius’ early stage plan
According to a press release, Mashinsky’s exit takes effect immediately. However, he has committed to maintaining his service, fostering the crypto lender’s ability to help creditors get the “best outcome” possible.
His resignation has happened in the wave of the tumultuous bankruptcy proceedings and three days after leaked audio from Celsius officials suggested the Company might attempt leveraging an IOU crypto for investor compensation.
During discussions for an early stage plan to convert the network’s debt into new crypto, leaked audio revealed that Celsius would release “wrapped tokens” to serve as an IOU for clients. According to the audio, the tokens would represent the rate between what the firm owes customers and the assets available.
An excerpt from Mr. Mashinsky’s resignation letter reads, “Effective immediately, please accept my resignation as CEO of Celsius Network Ltd,” adding that he was also stepping down from all directorship roles and other offices in each of the firm’s direct and indirect branches. Mashinsky also stated:
“I believe we all will get more if Celsians stay united and help the UCC with the best recovery plan. I remain willing and available to continue to work with the Company and their advisors to achieve a successful reorganization.”
For him, the CEO role has become an ‘increasing distraction’ that has prevented him from aiding the Company towards successful reorganization. The ex-CEO apologized for the hectic financial circumstances community members have had to face.
Mashinsky also assured community members of his tireless efforts to help the crypto lender and its investors design a value-adding plan that would enable the firm to refund creditors reasonably and efficiently. Noting that these efforts began after the pause, he articulated his commitment to supporting the Company’s effort to implement and develop that plan to restore the wholeness of account holders.
With Ferraro coming in as Chief Restructuring Officer and interim CEO, the Unsecured Creditors Committee hopes that the change will be “a positive step set to allow the Debtors, the Committee, and every other stakeholder to concentrate on moving the firm’s cases forward promptly and efficiently.”
Bear market aftermath
As of May, Celsius stood among the grandest participants in cryptocurrency lending, recording over $8 billion in loans given to customers and managing approximately $12 billion worth of assets. The crypto lender could lend out crypto to clients who were open to paying highly high-interest rates. Part of the revenue generated would then be allocated to users.
Celsius Network was among the most affected when the industry-wide liquidity crunch happened. The firm has been battling continuing bankruptcy proceedings with many creditors looking to recover losses. The popular crypto lender halted withdrawals on June 12, 2022, and moved to declare bankruptcy a month later. In the first week of September, however, the Company tried to reopen withdrawals for some customers prompting the decision by an examiner appointed by the court to investigate the financial documentation of the firm.
According to previous reports, the crypto lender has seen multiple internal missteps that led up to the latest turmoil. Both internal documents and former staff hint at the lender’s overly aggressive exposure to risk, disorganization, and allegations of market manipulation.
Celsius Network’s slippery slope is an aftermath of the pressures of the prevailing bear market. Standing atop the list of affected companies this year, the crypto lender started taking blows in May after the Terra ecosystem toppled off and $60 billion worth of value vanished into thin air. The firm’s course of action during this time was freezing withdrawals in June and declaring Chapter 11 bankruptcy a month later.
Following Mashinsky’s announcement, Celsius native token (CEL) dropped in value by 7%, according to data on CoinMarketCap. At press time, CEL is trading at $1.50 on CoinGecko.