The Celsius creditor committee has stated that it will be investigating the conduct of CEO Alex Mashinsky and other insiders.
Committee To Investigate Celsius Debacle
On July 27, the U.S. Trustee appointed the Official Committee of Unsecured Creditors for the bankrupt crypto lender Celsius Network. In its first official statement released on Monday, the committee revealed its intentions to conduct in-depth investigations into CEO Alex Mashinsky and other Celsius insiders on the grounds of problematic asset deployment decisions, prepetition transfers, and other issues.
The seven individuals and institutional representatives who constitute the committee are Caroline G. Warren, Thomas DiFiore, ICB Solutions, Christopher Coco, Andrew Yoon, Mark Robinson, and Covario AG. They all hold digital assets in the Celsius platform and are highly motivated to maximize recoveries for all account holders and unsecured creditors.
Celsius CEO’s Suspicious Behavior
Mashinsky has been under a lot of fire for not being upfront about the conditions of the Celsius platform. However, as pointed out by the committee statement, he had continued to reassure customers about the stability of the Celsius platform even at the brink of bankruptcy. In fact, days before announcing bankruptcy, Mashinsky had claimed that the platform was successfully processing withdrawals, as it had more than sufficient reserves to support its operations. He also reassured the customers that all funds were well-protected on the platform under robust risk management frameworks. Barely a week later, Celsius paused all withdrawals, claiming a lack of liquidity. A month later, the company filed for bankruptcy.
In its statement, the committee declared that it had five main objectives, including the investigation of Celsius. It stated,
“The Committee intends to thoroughly investigate the prepetition conduct of Mashinsky and other Celsius insiders, including the problematic asset deployment decisions, prepetition transfers, and other issues. The Committee has already started this investigation and will work to ensure causes of action against Mashinsky and others are preserved and prosecuted for the benefit of the Debtors’ estate and the Committee’s constituents.”
Its other objectives include safeguarding account holders’ funds, overseeing the development of a viable business plan to preserve cash reserves, exploring strategic options to reorganize or sell the business, and establishing a clear line of communication with stakeholders. The committee has also set up a Twitter account to update the community on regular basis and will be engaging Kroll Inc. as its independent information agent.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.