The Celsius Network debacle cost the Caisse de depot et placement du Quebec (CDPQ) hundreds of millions, but the company’s top executives did not leave empty-handed. Before freezing the deposits of the cryptobank’s 1.7 million customers last June, they withdrew the equivalent of at least US$24 million in a matter of weeks.
Posted at 3:59 p.m.
These withdrawals were quietly made between April and June — while the company’s financial health was deteriorating due to the plunge in cryptocurrency prices — by Alex Mashinsky, who recently stepped down as CEO, co-founder Daniel Leon, who just departed, as well as chief technology officer Nuke Goldstein. Mr. Mashinky alone has recovered around 13 million US.
The details are in a voluminous document filed Thursday with a New York court. Celsius Network has been under US bankruptcy protection since July 13.
“We see that the withdrawals are accelerating in April with larger amounts, underlines Saidatou Dicko, professor in the department of accounting sciences at ESG UQAM, after consulting the document. It sounds a lot like insider trading. They (top executives) must have known this was in danger of going off the rails and it looks like they prepared. »
On Thursday, Celsius Network did not respond to questions from The Press.
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The content of the report accentuates the controversy that has been swirling around Celsius Network for several months. The cryptobank took its customers by surprise by freezing all their assets last June. Yet, less than 24 hours before the announcement of the decision, Mr. Mashinsky claimed that there was no need to worry about such a scenario.
TWITTER SCREENSHOT
While withdrawing cryptoassets last May, Alex Mashinsky gave the impression that everything was going like clockwork at Celsius Network.
Moreover, the company’s business model has been described by a US government agency as something akin to a Ponzi scheme. A survey of The Press also demonstrated that Mr. Mashinsky’s background was nebulous and that the contractor’s claims were riddled with inaccuracies.
Celsius Network pooled cryptocurrency deposits. It offered loans and interest, which could sometimes reach 17%, to depositors. The plummeting cryptocurrency prices since the beginning of the year plunged it into a liquidity crisis, which paved the way for filing for bankruptcy. This debacle forced the CDPQ to write off its 200 million investment made in the fall of 2021 in the company.
A “deception”
The calculations made by La Presse include withdrawals made by the leaders of the time as well as by entities related to them. Bitcoin, ether and the CEL token — Celsius Network’s token — are among the cryptoassets picked up by MM. Mashinsky, Leon and Goldstein. More than half of the 24 million US were withdrawn during the month of May.
Mr. Mashinsky notably made the equivalent of 5 million US in withdrawals on May 27. Very active on social networks at the time, the latter ignored the problems of the cryptobank by relaying, on Twitter, projects that were to be deployed by the company during the year.
“They were in the deception, said Mr.me Dicko. They displayed a very positive attitude while probably knowing something was wrong. Yet they were in the best position to know what was really going on. »
The CDPQ did not want to comment on Thursday on the operations carried out by MM. Mashinsky, Leon and Goldstein. After admitting its error in relation to Celsius Network last August, the woolen socks of Quebecers did not make other public outings. Its due diligence process is still the subject of unanswered questions.
Along with the other Celsius Network shareholders, the Caisse wishes to be represented on the committee involved in the bankruptcy proceedings. The objective is to potentially recover money in the event of the liquidation of certain assets of the cryptobank.
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- 10 months
- Period between the announcement of the CDPQ’s investment in Celsius Network and the confirmation that the investment had been delisted.
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