As Celsius founder Alex Mashinsky puts it, he not only invented DeFi, but also Uber and VoIP – and he even had a crack at creating Bitcoin four years before Satoshi Nakamoto.
Strangely enough, all of these claims are true.
“I tried to create electronic money in 2003 and 2004,” he said, as if you could invent a groundbreaking new system for money transfers in your shack one night after dinner. “Obviously it never started. But I’ve always believed that the internet should have its own money. I just haven’t figured out how to fix this double spend problem. “
Unlike many crypto leaders, Mashinsky had a successful career long before blockchain. A hobbyist and inventor since childhood, Mashinsky holds 50 patents covering aspects of the technology behind Skype, Netflix video streaming and Twitter, among other things. He has raised more than a billion in donations, has run eight companies since the 1990s, and oversaw $ 3 billion on exits. Mashinsky even persuaded the New York Metropolitan Transportation Authority to hire his company, Transit Wireless, to install Wi-Fi and cell phones throughout the subway system.
He attributes his success to his ability to see the potential of disruptive, transformative technologies long before the mainstream caught on.
“My wife claims that I will live all alone in the future. And every now and then the company comes to where I sat on the street and waited a long time for them. But sometimes they go in a completely different direction. “
It’s a little ironic then that when he finally read the Bitcoin whitepaper he thought it would never work. “Someone showed me Satoshi’s newspaper, I read it quickly and said,” Ah, what a waste of computing power, electricity and communication. That will never take off. “
Mashinsky’s crypto loan and lending platform Celsius can rightly claim to have pioneered the “return on staked assets” concept that powers much of decentralized finance today. The idea was first scribbled on a napkin in 2017, and Celsius raised $ 50 million in an ICO in early 2018.
“We think we invented DeFi, right? If you think about “what is decentralized finance?”, You can take an asset, put it in a wallet, and get a return, “he said, adding:
“The first time in history was that we launched our Celsius wallet in June 2018. Before Compound before and before Uniswap, the first time over a year before one of these companies.”
DeFi degens will no doubt argue that Celsius is missing out on the crucial “decentralized” aspect of DeFi as it is a company that is tightly controlled by Mashinsky himself. In fact, Celsius is often referred to as “Centralized Finance” or CeFi. “DeFi, CeFi, it doesn’t matter what you call it. Everyone is chasing returns because central banks and commercial banks just don’t pay you for your money.”
Invent VoIP and MoIP
Mashinsky went to great lengths to come up with his own name for DeFi: “MoIP” or “Money Over Internet Protocol”. This is indicative of his key role in the mid-1990s when he began developing Voice Over Internet Protocol (VoIP) technology, which revolutionized telecommunications and remains a key component of apps like Skype, WhatsApp and Telegram. At the time, however, he was better known for reselling telecommunications capabilities through his Arbinet company, which eventually rose to $ 1 billion after going public in 2004.
Mashinsky says he faces the same challenges today when it comes to getting people to see the revolutionary potential of crypto as he did then to convince people that the entire telecommunications industry – then $ 3 per minute for international calls or cell phone calls – would be completely disrupted by new technology:
“People thought the internet would never scale. Law? They basically said, look, the internet is a dial-up networking that runs on the telephone network. So how can it be bigger than the telephone network? “
As we now know, the Internet has of course not only swallowed the telephone network, but almost everything else too. He added:
“Today crypto or cryptocurrencies are discounted by most of the people as experiments for geeks and eccentrics, but I think one day we will find that all the money is flowing on this infrastructure. It’s only a matter of time. “
Call all cars
Seeing the future and being able to use it are two very different statements. Around the same time he was tinkering with electronic money, his driver got him up in an airport while he waited with a customer he wanted to impress.
At this point he had the brainwave for something very similar to Uber, five years before Garrett Camp invented Ubercab. Mashinsky’s version was called Groundlink (formerly LimoRes) and it was essentially the same concept, but so much earlier that you had to order the car with a Blackberry since the iPhone hadn’t even been invented yet. Having a head start of five years and still watching the $ 100 billion idea slip through his fingers is the greatest and most soul-destroying regret of his life, according to Mashinsky:
“Uber copied everything we had, we didn’t own a single car, we were cars on demand, we were the first app that could be used to order a car,” he said. “And yet we lost everything to Uber, because they subsidized. ” $ 14 billion worth of trips for millennials. For me as an entrepreneur, as someone who has won so often, it was a very difficult time to completely lose them. “He also explained how Uber’s approach turned out to be better:
“The slogan was:” Happy drivers are happy customers. “And that was the wrong statement, of course, because subsidized customers and unhappy drivers were the winning strategy, right? Even if you come up with the right concept, the business model and execution is just as important.”
In 2010, when Groundlink operated in 5,000 locations and was still bigger than Uber in New York, Mashinsky told the board that the company would need to adjust Uber’s driving subsidies to be competitive. But big investors weren’t interested in losing money, as Uber did then and still does today (it lost $ 8.5 billion in 2019). “You basically told me that now you don’t understand what you are talking about, then we’ll just replace you with another CEO,” he said.
Mashinsky left the company in 2011 and Groundlink continued to operate until a few months ago when it finally fell victim to the August pandemic-triggered slowdown. Mashinsky said he would become depressed as a result when Uber took off.
“It was definitely a very painful experience for me. I don’t take medication, but I think I should have taken medication. Let’s put it that way, “he said, adding:
“It was more about the size of the loss, wasn’t it? The fact that everything we tried came true and this company was worth tens of billions of dollars. “
Between leaving Groundlink and founding Celsius, Mashinsky served as CEO for 18 months trying to improve the fortunes of a company called Novatel Wireless (now Inseego). He even tried to withdraw before discovering that he was unsuitable for a leisure life. “I realized I couldn’t retire and then Crypto really gave me the passion I was looking for,” he explained.
Back in the USSR
Alex Mashinsky was born in Ukraine when it was still part of the Soviet Union and immigrated to Israel with his family in 1972. As a teenager, he bought confiscated goods such as hairdryers and VCRs from customs auctions and sold them at a profit. He attended three different universities, never quite finished his electrical engineering studies, was compulsory in the army, and made his way to New York in the late 1980s.
He lived under communism, socialism and capitalism and says that each has its advantages and disadvantages. “In the US, the system works exceptionally well here for people like me who, despite being an immigrant, have enabled me to express my ideas and thinking and build businesses, create jobs and earn a lot of wealth for myself. But it doesn’t work for 99% of the population. “Many Americans can’t even raise $ 500 in an emergency.
“My perspective of living the three systems has enabled me to appreciate much more these blessings that have been given to me and not to forget where I come from – the suffering and misery that many people around the world are going through , not to forget.”
Mashinsky said he was very comfortable financially and had thought long and hard about what he wanted to do with the rest of his career. He looked at the 400 richest people on Forbes, all of whom had reached the point where they never had to worry about money again and just made more money, or, “To measure their success by how much of those dollars or Whatever else we accumulate, “he added,” I didn’t want to end up like one of those guys, I wanted to make sure that my yardstick or measurement is based on how many lives I’ve influenced. “
“We didn’t want to give people fish or teach them to fish, we wanted to explain to people that there is a way to create sustainable fishing.”
Fishing for the family
Mashinsky’s sustainable fishing is achieved through blockchain. He says the big banks pool a few ordinary people’s deposits into billions in lots and then borrow them to make 18% profit without giving depositors a cut.
Celsius aims to disrupt this by using blockchain to pool low-value deposits into large pools and make money in a similar way to banks but giving 80% of returns back to depositors while receiving 20% for business stay.
“Money makes money. Most people don’t get this, most people think if you put money in the bank it just sits there. “he said.” But really, when you give your money to bankers, they immediately turn around and loan it to their other customers. “
“All we’ve done is take advantage of some of the best opportunities Wall Street has created to make returns or get value from capital.” Mashinsky talked at length about how banks are pulling ordinary people away by keeping all profits, and how the Federal Reserve, which prints 20% of all US dollars in existence last year, is cutting away people’s savings and so on.
Listening to him, he appears to have turned the anti-fed and anti-bank ideology beloved by Bitcoiners into a number of compelling reasons to turn your crypto over to Celsius.
It’s obviously pretty compelling as Celsius, according to him, has registered more than 246,000 users in 150 countries, with 84,000 currently active. According to a December audit by Chainlink, the company has processed approximately $ 8.2 billion in loans and has assets of over $ 3.3 billion.
While this is a long way from Grayscale’s AUM, it is spread across more investors with the typical Celsian wallet valued at around $ 13,000. In 2020, community members earned a cumulative $ 220 million in returns on 40 different cryptocurrencies at rates of up to 21.5%. Half of the users choose the CEL token, the value of which increased by 3500% in 2020, despite not being listed on a major exchange that year. However, FTX opened CEL trading in early January.
Staggering off a list of statistics, Mashinsky proudly says, “Nobody in crypto has ever achieved anything like this.” He added, “You will not find the bank or any other financial institution that can look you in the eye and say, ‘I always act in your best interests, I never charge you. ‘So I think we have a unique value proposition. “
Mashinsky’s great personality is celebrated by many Celsians who consider him a finance guru to save them from the banks by giving the gift of returns. To these people he is known as “the machine”. But the “cult” around Mashinsky is a matter of concern for others.
Redditor slavikolev wrote that there are “worrying similarities with OneCoin,” including the “absurd cult for the founder”, the “us and them” mentality of criticizing banks and suggesting CEL critics to lie, and the “absolutely absolute.” Idealism … and the belief that this will change everything for you, the investor. “
Missing the mark
Mashinsky has also made some public missteps, including a recent attempt with podcaster Peter McCormack, implying that Mashinky’s episode of What Bitcoin Did was pulled off the internet because the podcast entered into a sponsorship deal with Celsius competitor BlockFi. But it turns out Mashinsky never appeared on the show.
McCormack told the magazine that he believes Mashinsky “got out of hand” with a few other insults. “He just created a dramatic situation out of nowhere like he does,” he said, adding:
“He accused me of deleting an interview with him from my podcast, right? I never interviewed him for my podcast. And he never apologized. The guy’s a madman and he has to pull himself together. “
Another community member, JonBristow, was concerned that Mashinsky was getting cracks on BlockFi on Twitter. “Do you think it’s trashy that the CEO of a billion dollar company (like Alex) keeps talking badly and shitting on Twitter?” asked the Redditor. “It just makes the company look like a child is running it.”
Mashinsky is also taking some unusual moves, such as his recent decision to gift his wife Krissy with $ 20 million worth of CEL tokens as a gift in late October on her 50th birthday, a stretch that is now $ 73 million is worth. She immediately became the fourth largest token holder, and the story was picked up by the New York Post, which labeled him a “cryptocurrency mogul.” In response, Alex said that he sees Krissy’s support as the reason he got through the times after leaving Groundlink:
“Basically, while I was downstairs, my wife kept reminding me that nobody can take my brain away and that I will always be her hero no matter what. And when I achieved this success here at Celsius, I wanted to celebrate this special day and also remind her that I appreciate everything she has done for me during the difficult times. “
He admitted that as his wife she would likely get half of it anyway if he died, but said the gift gives her financial independence that can never be taken away: “When there is a dispute or when I come to a judgment against myself have or something that is their own capital. “
“I think people who know me and have followed me for a while now know that this was done for the right reasons. My wife deserves to be placed on a pedestal. We have six children together. She has a career, I have a career, but she definitely supported me with all of my crazy ideas and this was a great way to say thanks. “
“Abrupt” increase was completely normal
Another step that raised eyebrows was the decision in mid-2020 to suddenly raise $ 20 million in a crowdfunding campaign on BnkToTheFuture. More than 1000 smaller investors took part.
The Block analyst Larry Cermak called the increase “abrupt” and suggested that Tether’s $ 10 million investment was indeed a “bailout.” “We got some tips that they are about to shut down,” he tweeted before getting into an online spit with Mashinsky.
There’s a story about why Celsius rose so abruptly last month. We got some tips that they are about to shut down. 100% agree with you regarding the lack of transparency, i would be careful using it
– Larry Cermak (@lawmaster) July 5, 2020
Various other journalists, including myself, have received similar tips that Celsius is shady, which either failed or has led to some inconclusive stories.
The whole interaction with Cermak angered Mashinsky. “It’s just stupid to say, totally incompetent, isn’t it?” he says, adding that Cermak should have contacted him before spreading rumors.
Mashinsky said Tether was already heavily involved in Celsius and offered them justice to help strengthen the relationship. He had extended the offer to community members so that they could “take a seat next to me on the bus”.
“The point is, a company in trouble will never get a pre-monetary valuation of $ 120 million and definitely not from the third largest crypto project. This is Tether’s largest single investment in its history. “
Is that a unicorn in your pocket
After his bruising experience was overridden by major investors on Groundlink, he gave the new shareholders exactly zero voting rights – although he plans to outsource governance to the Celsius community one day.
“I am currently fully responsible for Celsius,” he confirmed. “But there are plans to turn this into a consensus mechanism that the community will have control over over time,” he says.
The endgame for Mashinsky is a successful initial public offering in the stock market valued at more than a billion dollars. “I think the best way to give people access to the vast majority of the population is through an IPO,” he said, adding, “I think we will take that option sooner or later. And that this is the best The way is to democratize access to Celsius. “
“It will be my third unicorn,” he said of his planned IPO:
“I think there are probably 15 people who have created three unicorns in their life. This is definitely going to be a special moment.”