Celsius CEO steps down amid bankruptcy proceedings

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Illustration shows Celsius Network logo and representations of cryptocurrencies
Celsius Network logo and representations of cryptocurrencies are seen in this illustration taken, June 13, 2022. REUTERS/Dado Ruvic/Illustration

Sept 27 (Reuters) - Celsius Network said on Tuesday Chief Executive Officer Alex Mashinsky has decided to step down and the bankrupt crypto lender appointed finance chief Chris Ferraro as its interim CEO.

Before Celsius, Ferraro spent nearly 18 years at JPMorgan Chase & Co (JPM.N). Celsius also said Ferraro would serve as the company's chief restructuring officer.

"I regret that my continued role as CEO has become an increasing distraction, and I am very sorry about the difficult financial circumstances members of our community are facing," Mashinsky said in a statement.

Mashinksy, who did not immediately respond to a Reuters, request for comment, chose to step down at a time the company is seeking protection from creditors.

In his resignation letter to the company's board of directors, Mashinsky said he remains committed to helping the company develop and promote a plan to return deposits to customers.

Celsius, based in Hoboken, New Jersey, filed for Chapter 11 bankruptcy on July 13, one month after freezing withdrawals and transfers for its 1.7 million customers because of "extreme" market conditions and listing a $1.19 billion deficit on its balance sheet.

Crypto lenders like Celsius boomed during the COVID-19 pandemic, drawing depositors with high interest rates and easy access to loans rarely offered by traditional banks. They lent out tokens to mostly institutional investors, making a profit from the difference.

But the lenders' business model came under scrutiny after a sharp crypto market sell-off earlier this year, spurred by the collapse of major tokens terraUSD and luna.

Last month, Celsius sued a former investment manager, accusing him of losing or stealing tens of millions of dollars in assets before the crypto lender went bankrupt.

Rival crypto lender Voyager Digital, which also filed for bankruptcy in July, said on Monday that crypto exchange FTX won a $1.42 billion bid to acquire its assets at an auction.

Reporting by Mehnaz Yasmin in Bengaluru and Hannah Lang in Washington; additional reporting by Tom Wilson in London; Editing by Maju Samuel and Jonathan Oatis

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Hannah Lang covers financial technology and cryptocurrency, including the businesses that drive the industry and policy developments that govern the sector. Hannah previously worked at American Banker where she covered bank regulation and the Federal Reserve. She graduated from the University of Maryland, College Park and lives in Washington, DC.