Celsius withdraws proposal to hire CFO back to $92,000 a month
Celsius was sued on Thursday by former chief investment officer Jason Stone, as pressure continues to mount on the firm amid a crash in cryptocurrency prices. Among other things, Stone has alleged that Celsius CEO Alex Mashinsky (above) was “capable of enriching himself considerably.”
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Embattled lending platform Celsius has withdrawn its proposal to bring back ex-CFO Rod Bolger at $92,000 a month, prorated over a period of at least six weeks, according to a court document filed in the Southern District of New York on Friday. The notice of withdrawal came just ahead of a hearing scheduled for Monday to consider it.
While Bolger worked full-time with the company as CFO, the original proposal shows he had a base salary of $750,000 and a performance-based cash bonus of up to 75% of base, in addition to stock and token options, bringing the top of his total earnings range to around 1[ads1].3 million dollars. The filing also indicated that Bolger is technically still on the company’s payroll.
“On 30 June 2022, Mr Bolger notified the debtors that he voluntarily terminated his employment,” the archive states. “Pursuant to his termination notice and the terms of his employment agreement (as defined below), Bolger is required to give the Debtors eight weeks’ notice, which he has done, and he continues to serve as an employee of the Debtors.”
Had the proposal been approved, it is unclear whether Bolger would have potentially received compensation of $62,500 (his monthly base salary), in addition to the $92,000 monthly consulting fee that Celsius had requested. The filing stated that he continued to serve as an employee of Celsius, but it also noted that Bolger “was not entitled to any severance pay.”
CNBC reached out to Celsius to ask about the terms of the proposed proposal, but did not immediately hear back to our request for comment, sent after business hours.
The decision to reject the proposal came three days after CNBC first reported the request to enlist Bolger’s help as a consultant during the bankruptcy process. It also follows a formal objection filed by Keith Suckno, a CPA and Celsius investor who challenged the move by Celsius, alleging that “little detail” was provided as to why Bolger’s services were necessary for the bankruptcy proceedings.
In the original proposal, Celsius said it needed Bolger to help it navigate the bankruptcy proceedings as counsel, “because of Mr. Bolger’s familiarity with the debtor’s business.” It went on to say that during Bolger’s tenure, he led efforts to stabilize the business during turbulent market volatility this year, guide the financial aspects of the business and act as the head of the company.
Bolger, a former CFO for Royal Bank of Canada and branches of Bank of America, was previously 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, he claimed that 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 major financial institutions.
“This put us in a strong position to weather the recent market turbulence and ensure that customers who needed to access their digital assets could get them for free and transparently,” continued Bolger’s quote in the Celsius blog post. The following Monday, the platform stopped all withdrawals and transfers.
Meanwhile, two days after that blog post — and three days before Celsius froze customer funds on the platform — Bolger was featured on Celsius’ weekly ask-me-anything show on YouTube, saying the company welcomed 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 out the tools that are Basel-like … Those are the standards that basically work the banks below,” Bolger continued, adding that Celsius was already evaluating market risk and operational risk so they could “continue to build the level of trust in the community.”
The video was published on Friday 10 June, and the following Monday, June 13, Celsius closed the on-and-off ramps to user funds. Celsius owes its users about $4.7 billion, according to the bankruptcy filing.
CNBC sent multiple requests to Bolger on two different platforms, but did not immediately hear back for comment.
After Bolger’s departure from the CFO position, Celsius then installed Chris Ferraro, then head of financial planning, analysis and investor relations for Celsius. Within days of his appointment, the company filed for bankruptcy protection.
Once a titan of the crypto-lending world, Celsius is now facing allegations that it ran a Ponzi scheme by paying early depositors with the money it received from new users.
At its peak in October 2021, CEO Alex Mashinsky said the crypto lender had $25 billion in assets under management. Now Celsius is down to $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 the platform cash without collateral to back up the scheme. The list of the top 50 unsecured creditors includes Sam Bankman-Fried’s trading firm Alameda Research.
Retail investors have pleaded with the judge to help them recover some of their lost holdings, with some saying their life savings have effectively been wiped out.
