Alex Maszynski, founder of Celsius, feels the warmth

Alex Maszynski, the founder of crypto lender Celsius, has built a cult by taking advantage of public distrust in major financial institutions.

Launched five years ago, degree Celsiuswhich offers customers high interest rates on crypto deposits, attracted 1.7 million customers under the motto “#unbank yourself”.

The company itself now faces a crisis of confidence following its decision Monday to block customers from withdrawing funds, citing “extreme market conditions” following a wave of outflows and losses from risky transactions.

Just three days earlier, during his weekly one-hour YouTube broadcast to customers, Mechanical it was in a typically hostile form, rejecting critics who warned of an impending liquidity crisis.

“All these skeptics and haters haven’t built anything,” Maszynski told clients he calls Celsius. “Celsius has billions in liquidity and we provide instant access to anyone who needs access to it.”

His failure to deliver on that promise prompted Machinski to fight for the company’s survival and his customers to fear huge losses.

John, a Philadelphia-based commercial real estate agent who declined to give his last name, began withdrawing his money from Celsius last weekend, but still has $ 150,000 trapped. “It’s definitely a disappointment,” he said. I probably didn’t look at him as much as I should have.

Machinski tweeted on Wednesday that “this is a difficult time” and that his team is “working constantly”.

Celsius Marketing has chosen Machinski, known for his signature T-shirt “Banks are not your friends”, as a figure of Robin Hood and a self-help guru who will help customers achieve “financial freedom”. He criticizes rival cryptocurrencies such as Coinbase for returning more money to Wall Street investors than their clients, and his personal website includes a “failed venture” section, offering a lesson he learned as an “independent investor and entrepreneur.”

“Unfortunately, some of his companies suffered in 2008. When the recession hit, Alex’s decision to use two of his debt ventures proved disastrous as his creditors refused to be patient,” his website said.

As a frontman of the company, he has indulged in stunts. He shared a video in 2020 in which he is wearing a hood and jeans, trying to remove the Chase inscription from the wall of a bank branch on Park Avenue in Manhattan. “This is how we take down banks,” he wrote. “One branch of Chase at a time.”

Born in Soviet Ukraine and raised in Israel, the 56-year-old Maszynski lives in Manhattan with his wife and six children. His career has taken him to more than half a dozen technology start-ups, from telecommunications to travel sharing. He holds 35 patents and has described himself as a co-discoverer of voice over Internet Protocol, the technology behind online telephony.

Since co-founding Celsius, Machinsky, who has been dubbed the “machine”, has pursued rapid growth, boosting its asset base to a peak of $ 25 billion last year – and attracting investment from the Canadian pension fund Caisse de dépôt et placement du Quebec and WestCap , a fund run by former Blackstone and Airbnb CEO Lawrence Tosi.

“The name of the game for retail crypto lenders was consumer growth at all costs,” said Max Bunen, founder of B2C2 crypto broker. He said the pressure to offer high interest rates has led companies to risky investments “often with unfavorable results”.

In the small circle of cryptocurrency founders and CEOs, some were wary of Machinski. “They were very aggressive in the way they ran the company,” said an investor who was considering investing in Celsius but gave up. “He was a man who took a high risk.”

Mechanical declined to comment.

Several executives said they had declined to invest or deal with Celsius because they lacked confidence in Mashinsky, or would take a loan from Celsius but did not lend to him.

Another investor said Celsius was too often found with money tied to crypto explosions, such as collapsed Terra and Luna coins or large hacks. But “Alex, like the Energizer bunny, just keeps going,” he said.

In the private sector, cryptocurrencies have been worried for at least a year that risky lending by Celsius looks like an “accident waiting to happen.” Mechanical always rejected criticism.

“In terms of risk, we are probably one of the least risky businesses that regulators around the world have ever seen,” he told FT last year, citing the company’s ability to withstand sales of more than 50 percent in 2020 and 2021. “There is no bank in England that can go through 53% absorption and not fail. That’s really funny here. ”

Brett DeLuca, an actor from Los Angeles, is familiar with Machinski’s bold statements from his weekly webcasts. “I would watch his promotion every Friday. He seemed quite knowledgeable, “said DeLuca, who started using Celsius early last year. He has $ 20,000 left in the company.

This week, Maszynski’s low profile annoys DeLuca. “He likes to be in front of the camera. That’s who he is, “he said. “If he doesn’t come out here in a week or two, then I’m worried I’ll lose my 20,000.”

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