Celsius CEO steps down amid bankruptcy proceedings

(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.

“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.

Mashinsky chose to step down at a time the company is seeking protection from creditors.

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 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 spurred by the collapse of major tokens terraUSD and luna in May.

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.

(Reporting by Mehnaz Yasmin in Bengaluru; Editing by Maju Samuel)

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