Celsius Creditor Committee Takes Aim at CEO Mashinsky, Other Insiders

A seven-member committee is investigating Celsius CEO Mashinsky’s conduct and the lender’s “problematic asset deployment decisions”

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key takeaways

  • The committee aims to prioritize interests of Celsius account holders throughout the firm’s bankruptcy
  • It has hired legal counsel, restructuring experts and a blockchain analytics unit to help investigate

A committee representing Celsius users has submitted its official mission statement in pursuit of an investigation into the bankrupt crypto lender.

In its first statement since the group’s formation on July 27, the committee pledged to put interests of Celsius’ account holders and unsecured creditors first. The group consists of five individuals and two entities including Covario AG, a Zug-based crypto prime brokerage.

Creditor committees are often formed in complex bankruptcy cases and are consulted in reorganization planning.

Celsius filed for bankruptcy in New York on July 13, a month after freezing withdrawals on its platform. The lender claims a $1.2 billion shortfall on its balance sheet and owes more than $4.7 billion to users alone.

The committee is already looking into the “conduct of Mashinsky and other Celsius insiders, including the problematic asset deployment decisions, prepetition [pre-bankruptcy] transfers and other issues.”

It noted that Celsius is preparing to fund its restructuring process using current cash reserves, proceeds from its bitcoin mining business and from other potential asset sales. 

The Texas State Securities Board last week urged a US court to deny Celsius’ request to sell its mined bitcoin, citing concerns over whether funds generated would go to help spurned users rather than the company itself.

“The Committee is prepared to work day and night to protect the rights of its constituents who have been harmed by Celsius’ improvident decisions and is up to the task before it,” said the group in court documents. Celsius didn’t return Blockworks’ request for comment by press time.

To help in its quest to make Celsius creditors whole, the committee appointed global law firm White & Case as its counsel and recruited restructuring advisors M3 Partners and Perella Weinberg Partners. Blockchain analytics unit Elementus is pegged to help investigate.

The committee, which has its own Twitter account, is also working with risk consultancy firm Kroll to set up a website and call center for customers affected by Celsius’ losses.


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