A new report from the Financial Times has shed more light on the downfall of the crypto lending company Celsius Network. Founded by Alex Mashinsky, the company has been affected by the downside trend in the sector and was forced to halt all operations, negatively impacting their clients, and filed for bankruptcy.
The report claims that Mashinsky took over the company’s trading strategy back in January 2022. At that time, the price of Bitcoin was hovering around $35,000 to $40,000, and the crypto market was coming out of a major downtrend to find support at these levels.
The crypto market went on to trade sideways for over a month, and to move inside a tight range with Bitcoin bottoming at the mid area around $30,000. Aware of the company’s financial situation, and looking to make up for its losses, according to the report, Mashinsky was ready to make a significant bet on the price of Bitcoin.
In January, the U.S. Federal Reserve (Fed) was about to announce its shift in monetary policy to slow down inflation. The financial institution hinted at an interest rate hike regime with a decrease on their balance sheet.
Mashinsky was betting on the crypto market trending lower on the back of these announcements. Therefore, he sold “hundreds of millions of dollars’ worth of bitcoin” expecting to buy it back at a discount, but the market moved in the opposite direction.
According to the Financial Times, Celsius was forced to purchase their crypto holdings at a loss when BTC and other assets rallied. The sector eventually saw significant losses, but Mashinsky and his team made wrong assumptions about the timing of the crypto crash, the report claims to cite multiple people familiar with the matter:
He was ordering the traders to massively trade the book off of bad information. He was slugging around huge chunks of bitcoin.
Celsius Lost Billions In Crypto By Trading These Products
Mashinksy’s involvement in his trading department caused conflict among the staff, the Financial Times said. The company’s former Chief Investment Officer (CIO) Frank van Etten questioned Mashinsky’s trade and his participation in making investments decision.
The executive left the company in February 2022, most likely due to his clashes with Mashinsky. The Financial Times claims that there was a span of two days between Celsius selling their Bitcoin and buying it again at a loss.
If the company have waited longer, they could have profited from the crash in the crypto…
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