The head of crypto lender Celsius Network Alex Mashinsky resigned on Tuesday with an apology to customers for the “difficult financial circumstances” the company’s bankruptcy had left them in.

Celsius filed for bankruptcy protection in July saying it had a $1.2bn hole in its balance sheet, making it one of the highest profile casualties of the crash in crypto markets earlier this year.

The lender has hundreds of thousands of customers who deposited crypto with the company, which promised double-digit interest rates on some assets, and now face significant losses on their savings.

The sudden resignation came two months into a bankruptcy process that has yet to produce clarity for Celsius customers on when and how much of their money they can expect to get back. Celsius said Mashinsky would be replaced by Chris Ferraro, the company’s chief financial officer and a former executive at JPMorgan Chase.

“I regret that my continued role as chief executive has become an increasing distraction, and I am very sorry about the difficult financial circumstances members of our community are facing,” Mashinsky said in a letter to the Celsius board. (He remains a director of the Celsius parent company.)

Mashinsky, a former telecoms entrepreneur who founded Celsius in 2017, added that he was committed to helping Celsius “flesh out and promote” a plan for the company to return assets to creditors “in the fairest and most efficient way”.

In recent weeks, leaks of internal meetings at Celsius have indicated the company may propose a restructuring that involves giving customers a crypto token substitute for their claims while launching a new business based on providing custodian services for crypto.

Celsius’s collapse earlier this year rocked crypto markets. It was the first major crypto business to freeze customer accounts in June, firing the starting gun on a markets crisis that has felled several digital assets start-ups.

Rival crypto broker Voyager Digital, another business that offered interest on crypto tokens, also fell into bankruptcy. On Tuesday, Voyager said it had agreed a sale of its assets to FTX US, the crypto exchange led by Sam Bankman-Fried.

Mashinsky has faced intense criticism as a result of the bankruptcy, with the angry customers filing letters to the court claiming they had been misled during the weekly YouTube appearances he used to promote Celsius.

The complaints were echoed by the Vermont state securities regulator, which alleged in a court filing that Celsius operated what could resemble a Ponzi scheme for at least two years prior to its collapse.

Celsius was backed by two major blue-chip investors, WestCap and Caisse de dépôt et placement du Québec, Canada’s second largest pension fund, who led a $600mn funding round late last year.

In July, CDPQ wrote off its $150mn investment into Celsius, conceding it went into crypto “too soon”. 

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