Celsius was sued by former investment manager Jason Stone on Thursday as pressure continues to mount on the company amid a slump in cryptocurrency prices. Stone has alleged, among other things, that Celsius CEO Alex Mashinsky (above) was “able to enrich himself considerably”.
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Conflict lending platform Celsius has been taken down his motion to return to the ex-CFO Rod Bolger at $92,000 per month, prorated over a period of at least six weeks, according to a court document filed Friday in the Southern District of New York. The withdrawal notice came just before a hearing scheduled for Monday to review it.
While Bolger worked full-time with the company as CFO, shows the original movement who had a base salary of $750,000 and a performance-based cash bonus of up to 75% of his base, plus stock options and tokens, making the top of his total revenue range around 1.3 million dollars. The filing also indicated that Bolger technically remains on the company’s payroll.
“On June 30, 2022, Mr. Bolger notified the Debtors that he was voluntarily terminating his employment.” read the file. “Pursuant to his notice of termination and the terms of his employment agreement (as defined below), Mr. Bolger is required to give the Debtors eight weeks’ notice, which he has done, and continues to serve as an employee of Debtors”.
Had the motion been granted, it is unclear whether Bolger would have received compensation of $62,500 (his monthly base salary), in addition to the $92,000 monthly consulting fee that Celsius had requested. The filing said he continued to work as an employee of Celsius, but also noted that Bolger was “not entitled to any severance pay.”
CNBC reached out to Celsius to ask about the terms of the proposed motion, but he did not immediately respond to our request for comment, sent after business hours.
The decision to dismiss the motion came three days after CNBC first reported the request to enlist Bolger’s help as a consultant during the bankruptcy process. Also follow a formal objection presented by Keith Suckno, a CPA and Celsius investor who challenged Celsius’ move, contended that it provided “too little detail” as to why Bolger’s services were needed for the bankruptcy proceeding.
In the original motion, Celsius said it needed Bolger to help it navigate the bankruptcy proceedings as an adviser, “because of Mr. Bolger’s familiarity with the debtors’ business.” He went on to say that during Bolger’s tenure, he led efforts to stabilize the business during turbulent market volatility this year, guiding the financial aspects of the business and acting as the company’s leader.
Bolger, a former CFO of Royal Bank of Canada and divisions of Bank of Americahe was with Celsius for five months before resigning on June 30, about three weeks after the platform halted all withdrawals.
Bolger’s last days in Celsius
In Suckno’s objection to bringing Bolger back to lead the bankruptcy proceedings, it claimed Bolger had “misrepresented the financial condition and liquidity” of Celsius in a company blog post titled “Meet Rod Bolger, CFO, Celsius”, published five days before the platform froze withdrawals due to “extreme market conditions”.
In that post, which CNBC also reviewed, Bolger said in a print interview that Celsius’ “strong liquidity framework, established practices around liquidity data and modeling” were similar to other large financial institutions.
“This put us in a strong position to weather the recent market turbulence and ensure that customers who needed access to their digital assets could get them free and clear.” continued Bolger’s quote in the Celsius blog post. The following Monday, the platform stopped all withdrawals and transfers.
Meanwhile, two days after this blog post, and three days before Celsius froze customer funds on the platform, Bolger appeared on Celsius’ weekly show on YouTubein which he said the company welcomed the regulation.
“We believe in transparency. Blockchain is about transparency. We’re transparent. You know, my goal is for us to be regulated everywhere,” Bolger said in the video.
“We have voluntarily disclosed a lot of financial information. My goal, even before we are regulated and/or public and required to do so, is to continue to build the tools that are similar to Basel…These are the standards that banks basically work with,” Bolger continued, adding that Celsius was already assessing market risk and operational risk, so they could “continue to build the level of trust in the community.” .
The video was posted on Friday, June 10, and the following Monday, June 13, Celsius closed its on- and off-ramps to user funds. Celsius owes its users about $4.7 billion, according to your bankruptcy filing.
CNBC sent multiple requests to Bolger on two different platforms but did not immediately receive a response for comment.
Following Bolger’s departure as CFO, Celsius subsequently installed Chris Ferraro, then Celsius’ head of financial planning, analysis and investor relations. A few days after his appointment, the company declared bankruptcy.
Once a titan of the crypto-lending world, Celsius is now facing claims that it ran a Ponzi scheme by paying early depositors with money it got from new users.
At its peak in October 2021, CEO Alex Mashinsky said that The crypto lender had $25 billion in assets under management. Now, Celsius is ready $167 million in “cash on hand,” which it says will provide “ample liquidity” to support operations during the restructuring process.
This filing also shows that Celsius has more than 100,000 creditors, some of whom lent cash to the platform without any collateral to back up the deal. The list of its top 50 unsecured creditors includes Sam Bankman-Fried’s trading firm Alameda Research.
Retail investors have asked the judge to help them recover some of their lost holdings, with some saying their life savings have effectively been wiped out.