Alex Mashinsky will have to fight for his reputation in the midst of the market crash.
Alex Mashinsky might be in the crosshairs of a crypto meltdown but his personal website shows no signs of struggle.
A biography describes the co-founder of cryptocurrency lender Celsius Network as “born to communism, raised under socialism, and is currently flourishing under capitalism”. There are also a variety of family snaps depicting domestic bliss.
Between photos of Mashinsky celebrating business successes are personal shots of Krissy and their six children. The photos show a strong effort by Mashinsky to project his image as a successful cyber currency entrepreneur.
After Mashinsky became the main figure in the crypto downturn, his reputation was less flattering.
Following “extreme market conditions”, Celsius stopped all withdrawals from its Bitcoin ‘bank” on Monday. The five-year-old company posted in a blog that it was taking “necessary actions for the benefit of the entire community to stabilize liquidity and operations.”
.@CelsiusNetwork is pausing all withdrawals, Swap, and transfers between accounts. Acting in the interest of our community is our top priority. Our operations continue and we will continue to share information with the community. More here: https://t.co/CvjORUICs2
— Celsius (@CelsiusNetwork) June 13, 2022
The accounts of the 1.7 million retail users it claimed have been frozen, including those in the US, UK, and Israel. It rattled all crypto markets.
Bitcoin, the largest digital token in the world, fell to $20,834 (£17.182) Tuesday. It had dropped another 10pc after cryptocurrencies lost $100bn on Monday.
Binance, the world’s largest crypto exchange, was responsible for the sell-off. It temporarily stopped trading in Bitcoin due to a “technical error”.
Mashinsky, 56 years old, is now fighting to preserve Celsius’s reputation and stop crypto chaos from spiralling further. This isn’t the first time Mashinsky has been through difficult times or critics.
Mashinsky was born in Ukraine but raised in Israel. He founded companies like Transit Wireless and Arbinet, which have enjoyed mixed success in the telecoms industry.
He claims to have invented internet voice-calling and has received more than 50 patents in support of his ideas. This was all part of a long journey towards creating a disruptive business.
Mashinsky’s website admits to many failures, including the “decision to leverage 2 of his ventures using debt” during 2008’s financial crisis. This decision “turned disastrous”.
because I am winning and giving it all to my community…
— Alex Mashinsky (@Mashinsky) June 11, 2022
Mashinky, who lives in America now, is determined to become a self-made man.
Founder interviewed him in 2018 to learn that he had given up on working for another person after struggling to pay the bills as a parking enforcement officer. He was almost able to give a fine to a potential customer who he had just met through chance.
He even portrayed himself as Robin Hood, determined to change the status quo using the decentralised systems that underpin Bitcoin.
Founder was told by him that the barons of the internet–the Facebooks and Googles who have control over the data but are basically just huge toll collectors-–are sucking so much out of it that everyone’s looking to replace them.” “Decentralization is the only way to replace these barons.”
Mashinsky was confident ahead of the crypto crash that will occur this week. Mashinsky answered a Twitter question over the weekend about why he had so many enemies. He said, “Because I’m winning and giving it all back to my community.”
Celsius was his greatest success to date. It was launched to try to disrupt big banks. It claims to help investors attain “financial freedom” by lending out cryptocurrency borrowed from customers in return for a return. The yields can reach up to 18%.
Mashinsky has been able to capitalize on the media attention about the rapid rise in Celsius, but the company has also drawn some negative scrutiny.
It suspended Yaron Shalem as its former chief financial officer after he was detained by Israeli police for fraud allegations related to cryptocurrencies.
Celsius, who has approximately 200 employees around the world, tweeted that it didn’t relate to his work or time at the company and that “no assets were misplaced, mishandled”
Although its crypto assets were worth as high as $24bn last December, they fell to $11.8bn in May as a result of a drop in the price of digital tokens. It is also known for aggressively placing bets on depositors’ funds. Since March, $2.5bn in funds have been withdrawn.
The ongoing turmoil is serious considering cryptocurrency’s continued tilt towards mainstream adoption.
In May, a third of UK consumers owned or still own cyber currency, compared to 29pc in October. This is according to Coinbase research, which runs a crypto exchange.
The Treasury plans to have the Bank of England take control of bankrupt companies that offer “stablecoin”, digital tokens tied to currencies, to prevent a crypto crash from affecting financial stability.
Viktor Prokopenya is a billionaire fintech investor who founded VP Capital. He fears that the crypto slide could lead to a loss of trust, which could cause a financial catastrophe.
He said, “We are currently sitting in a time bomb.” This is because the stablecoin money is not collateralised.
Although some reserves exist, it can be hard to cash them in due to the banking regulations that are rightly designed to stop money laundering. They are not always backed by real assets.
Trust is a key component of trust. But trust can quickly evaporate. History has shown us that too many people will try to cash out, resulting in a 1930s-style ‘run on banks’ or a similar collapse to the 2008 subprime mortgage crisis.
This latest sell-off will fuel criticisms of crypto as a risky investment due to the market’s instability and lack of regulation.
Mashinsky and his wife could be among the crypto holders worried about what the future holds.
A tweet from October 2020 states that her husband gifted her 15m Celsius tokens (CEL), worth $20m, for her 50th Birthday.
He wrote, “I gave my wife @KrissyMashinsky an extremely special present of 15,000,000 CEL tokens to celebrate her very special birthday.”
“She has supported me through everything and even made mistakes. Krissy, I love you and would not have @CelsiusNetwork done without you.
As he seeks to restore his reputation as an investor in crypto, Mashinsky will hope for the same understanding.
