Crypto lender Celsius’ bankruptcy filings reveals company in deep trouble
The bankruptcy filing has revealed some unpleasant surprises about Celsius, with a $1.2 billion deficit formed largely as a result of user deposits.
The document signed off by Celsius CEO Alex Mashinsky has revealed that the company holds around $4.3 billion in assets against $5.5 billion in liabilities, which is representing a $1.2 billion deficit.
From the total amount of liabilities of $5.5 billion, user deposits made up the majority of liabilities worth at $4.72 billion, while the assets include company's native CEL tokens valued at $600 million, $720 million worth of mining assets and $1.75 billion in crypto assets.
However, the value of the company's native CEL tokens has drawn suspicion from some in the crypto community, as the entire market cap for CEL tokens is only $321 million. The crypto assets that company is currently holding includes 410,421 Lido Staked ETH (stETH) tokens worth approximately $479 million which is generating 5% APY, though the tokens themselves cannot be redeemed for Ether (ETH) until Ethereum network transitions into Proof-of-Stake consensus in the Merge.
Alex Mashinsky, Celsius CEO signed a document stating that the company could also sell Bitcoin (BTC) mined by its Celsius Mining Bitcoin mining operation to generate sufficient assets, projecting that it could generate about 15,000 BTC through 2023, which will be used to repay at least one of its loans and provide revenue for the company in the future.
With the Chapter 11 bankruptcy proceedings, Celsius is filing for protection to claim ownership of all company assets. Under SIPA, a failed firm must either transfer its accounts to another firm or be liquidated and send funds to investors.
It is noticeable that CEL token has been falling since January, dropping 84% from $4.38 to $0.73, with a spike in June coinciding with a short squeeze attempt by the community.