cryptocurrency

Celsius Lost Users’ Funds Trading Bitcoin (BTC) Bankruptcy at CEO Alex Mashinsky’s Request: Report

Crypto lending platform Celsius reportedly attempted to trade Bitcoin (BTC) to its users shortly before the company filed for bankruptcy.

The Financial Times (FT) Reports That user’s percent funds are misplaced for Bitcoin trading under CEO Alex Mashinsky.

According to the report, Mashinsky assembled his investment team in January to announce that he would take control of the company’s trading strategy ahead of a Federal Reserve meeting that he believed would move the markets.

FT sources said that Mashinsky was convinced that the hawkish outcome of the Fed meeting would send the crypto markets lower, and he wanted the company to sell large amounts of BTC.

Someone said,

“He was ordering traders to trade widely in the book of bad information… he was manipulating huge blocks of bitcoin.” ”

The Fed meeting did not have Mashinsky’s expected impact on the price of BTC, and Celsius reportedly had to buy back at a loss before reporting a $50 million loss in January.

Source: Financial Times

The FT report also details another losing trade as Celsius bought into the Grayscale Bitcoin Trust (GBTC), a popular investment product that follows the price of BTC and trades at a premium or discount depending on the direction of the markets.

According to FT, Celsius bought GBTC when it was trading at a premium, then incurred huge losses when BTC fell and GBTC started trading at a 15% discount.

Celsius was reportedly offered a deal to get out of the losing deal, but Mashinsky refused, expecting the discount to eventually shrink. The company finally exited trading when GBTC was trading at a 25% discount.

According to informed sources, the company’s total losses in GBTC trading alone ranged between $100 million and $125 million.

The Financial Times story comes on the heels of reports that Mashinsky is under investigation by a panel of unsecured creditors who allege that Centennial clients have been repeatedly misled by the CEO about the safety of their money and the company’s business model.

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