Celsius Network founder and former chief executive Alex Mashinsky reportedly withdrew US$10mln from the platform just a matter of weeks before the company froze customer funds and filed for bankruptcy.
The ex-owner of the cryptocurrency lending firm took the funds out in “mid-to-late May” prior to withdrawals being stopped on 12 June, the Financial Times said.
Before its bankruptcy, Celsius Network had 1.7mln customers and US$25bn in assets under management, but the ‘crypto winter’ and poor market conditions contributed heavily to a US$2.85bn balance sheet gap.
The large withdrawal poses the question as to whether Mashinsky exerted inside knowledge when freezing funds and taking money out.
A spokesperson for the company told the FT that he withdrew the digital currencies to pay state and federal taxes.
“In the nine months leading up to that withdrawal, he consistently deposited cryptocurrency in amounts that totalled what he withdrew in May,” the spokesperson commented, adding that Mashinsky and his family themselves had US$44mln worth of crypto frozen on the platform.
There is the possibility he may be made to return the US$10mln because, in the 90 days leading up to the bankruptcy filing, any payments made by a company can be reversed, according to US laws.
But these questions will be answered in court, with Celsius set to appear in the next few days as part of disclosures regarding its finances, Coin Telegraph noted.
Mashinsky stepped down as chief executive on 27 September, insisting his role “has become an increasing distraction” but vowed to continue focussing on helping find a plan to return funds to creditors.