Summary: Alex Mashinsky, an Israeli-American entrepreneur and CEO of Celsius Network, used to participate at crypto conferences and summits wearing t-shirts with messages like: "Banks are not your friends" or "HODL." However, his cryptocurrency lending company faced bankruptcy earlier this month. He claimed that Celsius high yields investments are less riskier than those of banks, with ...

Alex Mashinsky, an Israeli-American entrepreneur and CEO of Celsius Network, used to participate at crypto conferences and summits wearing t-shirts with messages like: "Banks are not your friends" or "HODL." However, his cryptocurrency lending company faced bankruptcy earlier this month. He claimed that Celsius high yields investments are less riskier than those of banks, with far greater returns. 

These were just some of the red flags many crypto investors have ignored, although they sounded too good to be true. What followed was that Celsius Network suspended withdrawals for users on June 12, 2022, citing "extreme market conditions." The exchange filed for Chapter 11 bankruptcy soon after, on July 18, with a hole of $1.2 billion in its balance sheet. 

According to Daniel Gwen, a Ropes & Gray LLP associate specializing in restructuring, there have not been a lot of crypto-related Chapter 11 bankruptcy cases in the past. Gwen also said that Celsius Network has "marketed itself like a bank," adding even more confusion, considering Celsius was using slogans like "Banks are not your friends." If Celsius was an actual bank, it should have been excluded from the bankruptcy process because banks are "governed by state law insolvency processes."

Daniel Gwen also addressed a rumor that Goldman Sachs (GS) is leading a group of investors to buy Celsius assets, saying that the move remains a "theoretical possibility."

Author: Garrett Meifert