On Tuesday, Alex Mashinsky, the chief executive of Celsius Network, submitted his letter of resignation, just months after the crypto firm had filed for Chapter 11 bankruptcy protection.

While the CEO’s resignation would be effective immediately, he said that he would continue to work with the company in order to provide the ‘best outcome’ to its creditors.

The announcement

Mashinsky said that his continued role as the chief executive had become a distraction and he was sorry for the tough financial situation that the community members have had to deal with.

He said that he had been working tirelessly since they paused withdrawals to assist Celsius and its advisors in developing a viable plan that can be used for returning the coins to creditors in the most efficient and fairest way.

According to CoinMarketCap, there was a 7% drop in the price of the CEL token, which is the cryptocurrency of the company, after the announcement was made.

As of May, Celsius Network had been one of the biggest players in the crypto lending space, as it had loans of more than $8 billion given to clients and its total assets under management were $12 billion.

The structure

The company’s structure involved lending out the crypto deposited by its clients to counterparties who were ready to pay hefty interest rates for borrowing it.

Some of this revenue was then split by Celsius Network with its users. However, a liquidity crunch across the industry saw the structure come crashing down.

This had driven Celsius to hit a pause on withdrawals back in June. Due to the collapse in the market, other companies had also taken similar actions of freezing assets.

About three companies had ended up filing for bankruptcy. Internal documents and former employees of Celsius have revealed that there were a number of internal missteps that resulted in the eventual turmoil.

A number of employees had presented a picture of disorganization, risk-taking, and alleged market manipulation as well.

Other plans

Last week, leaked audio also showed that Celsius had also considered introducing a cryptocurrency for its debt.

Their plan had been to introduce ‘wrapped tokens’ that would serve as an IOU for clients. The tokens would be in the ratio of what assets the company has and the amount it owes to its clients.

On Tuesday, a filing had been made by the Unsecured Creditors Committee in the bankruptcy court.

They said that the announcement came as a positive step that would help the Committee and the Debtors, along with the rest of the stakeholders to focus on the cases in an efficient and prompt manner.

The filing further disclosed that Chris Ferraro, the Chief Financial Officer of the company would take the role of Interim Chief Executive Officer and the Chief Restructuring Officer as well.

Celsius had also obtained permission from the court for running a bitcoin mining operation, the proceeds of which it said would be used for paying off its creditors.