According to a bankruptcy filing and a recent Financial Times investigation, Celsius, the cryptocurrency trading platform that stopped all withdrawals a month ago and filed for bankruptcy yesterday, has a hole in its balance sheet the size of $1.2 billion.
For users, what does that mean? If you see any money returned at all, it’s likely not all of it. In its bankruptcy filing, Celsius lists $5.5 billion in liabilities, $4.7 billion of which are owing to its customers. The issue is that, even if the assets listed by Celsius have been assessed correctly, they only total $4.3 billion, with many of them being illiquid. The value of Celsius, commonly known as Celsius, which makes up a sizable portion of the company’s interests, has plummeted during the past year. Additionally, the company’s bitcoin mining facility is secured with around $1 billion in assets.
As high as 18 percent in certain circumstances, Celsius was infamous for giving ridiculously high interest rates on cryptocurrency, but in order to pay those off, it must place increasingly hazardous bets. What happened to all the money? Celsius explains in the filing that the company made bad gambles.
Users who signed up for Celsius agreed to terms of service that permitted Celsius to simply suspend withdrawals at any time, according to the bankruptcy petition. And to have it all spelled out in such clear terms in the bankruptcy petition is honestly a little shocking:
“Some of Celsius’ crypto is tied up in long-term and illiquid crypto deployment activities; some of Celsius’ crypto assets have been loaned to third parties, and some of Celsius’ crypto assets have been pledged in support of borrowings or sold to generate cash used to acquire Bitcoin mining equipment and the GK8 storage business,” the filing reads.
“Because of the variety of asset deployment strategies the Company engaged in, including the terms and length of time those strategies ‘lock’ the assets, and due to the drop in value of digital assets, Celsius was unable to both meet user withdrawals and provide additional collateral to support its obligations,” the filing continues.
Did you take it all in? You didn’t purchase cryptocurrency and have Celsius store it for you. You were giving the business “right and title” to your cryptocurrency.
You won’t find information on how much Celsius executives have spent on their own cryptocurrency in recent years in the bankruptcy filings. Since the company’s founding, Celsius co-founder and CEO Alex Mashinsky have sold nearly $44 million worth of Celsius cryptocurrency, according to a recent article.
What does that leave users with? Nobody can be certain. However, they are just the latest in a long list of creditors who are all trying to recover something from the Celsius disaster. Oddly enough, Celsius claims that when everything is said and done, it wants to reform and become a new firm.
