The CEO of Celsius, Alex Mashinsky, addressed the departure of its custodian, Prime Trust, over alleged aggressive rehypothecation practices during a youtube AMA today. So far, Mashinsky has insisted that these rumors are false.
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Celsius currently has over $16 billion assets under management. To facilitate its business it must use a custodial service.
The custodial service that Celsius used was Prime Trust. Prime Trust recently cut ties with Celsius for “a variety of business factors,” according to a spokesperson from the company interviewed in a Coindesk article.
An anonymous Prime Trust source for Coindesk alleged that Celsius has a practice of “endlessly rehypothecating assets.”
During the AMA, Mashinsky said that the article from Coindesk was false and even questioned whether there was a potential conflict of interest.
“I can tell you unequivocally that the article that Coindesk published is completely false. Remember, Coindesk is owned by the same company that owns one of our largest competitors,” said Mashinsky.
Coindesk is owned by the Digital Currency Group (DGC), a company with a massive portfolio of crypto-related businesses.
Perhaps the largest two competitors of Celsius are Nexo and Blockfi, but neither of them is in DCG’s portfolio. However, Coinbase is listed on DCG’s portfolio and offers borrowing and lending. Coinbase is also an investor in Blockfi. The connection between the two is loose and it’s unclear which competitor Mashinsky is referring to in his comments.
Mashinsky added that they had asked Coindesk to verify its assets with Prime Trust but that they refused to do so.
“Even though we told them that it is completely false and that we can easily verify that with Prime Trust, Coindesk refused to do that simple thing of just checking and verifying any of the assets, were we rehypothecated or not.”
This story is developing.