Court Documents Reveal How Celsius Execs Withdrew Millions Of Funds Before Bankcruptcy

KEY POINTS

Celsius halted withdrawals in June
It filed for bankruptcy in July
Celsius owes its users $4.7 billion but doesn't have the money to pay them back

Celsius' top executives withdrew millions of funds before it announced the suspension of customer withdrawals, court documents filed by the cryptocurrency firm's legal team in New York last week show.

Former Celsius CEO Alex Mashinsky, co-founder Daniel Leon, Chief Technology Officer (CTO) Nuke Goldstein and others named in the documents reportedly made multiple withdrawals, worth millions of dollars, in May. These withdrawals were in Bitcoin, Ether, USDC and even Celsius native token CEL, as well as wrapped BTC.

The former CEO made a total of $10 million in crypto withdrawals and Leon made a net withdrawal of around $3.1 million. Court filings also revealed that Goldstein made $13 million worth of transactions identified as withdrawals but had a net withdrawal of only $559,000.

Interestingly, aside from the firm's top executives, court documents showed Mashinsky's wife, Kristine, withdrew more than $2 million on May 31. The legal team, however, clarified that some transactions made by Celsius' top executives, which are marked as withdrawals, may represent transfers from one Celsius account to another.

"In many cases, the movement of funds between accounts are not 'withdrawals' from the platform; they simply reflect the shifting of funds between Mr. Goldstein's accounts on the platform," the lawyers said.

At today’s hearing, we had the opportunity to continue discussing important legal issues related to our motion to reopen withdrawals for certain Custody and Withhold account holders alongside the UCC, examiner, and other key stakeholders. Our next hearing is scheduled for Oct 20.
— Celsius (@CelsiusNetwork) October 7, 2022

This latest development about withdrawals made by Celsius's top executives on the days leading to its bankruptcy was bad optics considering the number of users who were not able to withdraw their money during the company's liquidity crisis a few months back. The company halted withdrawals in June and filed for bankruptcy the following month.

At the time, Celsius said the halt was made so the company would be in a better position to honor, over time, its withdrawal obligations." Later in July, Celsius paid its debt using the DeFi protocol maker, turning its liquidation price to zero.

Currently, Celsius owes its users around $4.7 billion but doesn't have the money to pay them back. The U.S. Trustee's Office is now investigating what happened to the company, how it went bankrupt and its process of storing and managing customer deposits.

Meanwhile, the company will auction off its assets on Oct. 20.