Former CEO of the now-defunct crypto lender Celsius, Alex Mashinsky, reportedly aimed to raise $1 billion for a rebranding effort before the firm ultimately filed for bankruptcy protection in mid-July. According to insiders, Mashinsky wanted to create a project called Celsius Web Service (CWS) which would focus on yield and custody. However, the plan seemed to have come a bit late as the company’s collapse was already in motion.
In May and June, Mashinsky unsuccessfully pitched CWS to Goldman Sachs and Abu Dhabi-backed fund ADQ. Notably, these two investors, along with Canadian Caisse de Depot et Placement du Quebec, had jointly invested $750 million in Celsius in 2021, but showed no interest in supporting Mashinsky’s new venture.
A Goldman presentation from May 2022 revealed that Celsius was exploring potential collaborations to increase its foothold in the cryptocurrency market. Yet, by that time, the company faced mounting pressure to repay loans and subsequently froze withdrawals, owing more than $4.7 billion to over 100,000 users. Despite these issues, Mashinsky was determined to shift his focus to CWS, a move that left some industry insiders puzzled, given Celsius had previously received substantial external investment.
However, by the time Mashinsky was pitching CWS, the funds were already depleted. “No one had any idea how bad things were at the time,” the source said. As reports revealed, mismanagement was believed to have played a key role in Celsius’s decline, though Mashinsky placed the blame on Alameda Research, a subsidiary of the now-defunct FTX.
In light of this tumultuous scenario, the CWS project arrived at an inopportune time and could not provide the necessary lifeline for Celsius. Instead, its attempt to refocus the company’s core activities in the midst of an ongoing financial collapse may have only further muddied the waters. Moreover, it remains unclear whether the novel approach within the cryptocurrency industry would have yielded better results had it been implemented earlier.
As with most aspects of the rapidly evolving cryptocurrency market, it is crucial to conduct thorough research before investing in this space. However, cases like Celsius serve as a reminder that even companies with significant backing can run into difficulties due to internal factors or market fluctuations. Ultimately, in the unpredictable world of cryptocurrencies, staying informed and skeptical is essential for making informed decisions and mitigating risk.
Source: Coingape
