Celsius, which faced liquidity problems over the past month and prevented users from withdrawing, shared its bankruptcy documents. Bankruptcy documents show that the company has a deficit of $1.19 billion on its balance sheet. It is also claimed that 35,000 Ethereum (ETH) was lost. Here are the details…
Celsius has a $1.2 billion deficit
Earlier, it was rumored that the huge balance sheet gap was the reason why cryptocurrency exchange FTX approved the deal to buy Celsius. The crypto loan firm has $4.3 billion in assets and $5.5 billion in debt. Well. It currently has a $1.2 million deficit. The company invested most of its clients’ funds in its own mining operation with a $750 million loan. Celsius also received a $108 million loan secured by $403 million in assets from the FTX exchange. The file also shows that the company raised only $600 million in 2021 instead of $750 million.
So Celsius’s filing for bankruptcy revealed some unpleasant surprises about the state of the crypto lending platform, including a $1.2 billion deficit largely as a result of user deposits. According to CoinGecko data, the value of CEL tokens has aroused suspicion from some in the crypto community as the entire market cap of CEL tokens is only $321 million.
Crypto assets include 410,421 Lido Staked ETH (stETH) tokens worth approximately $479 million generating 5% annual revenue. However, the tokens themselves will not be used until the Ethereum network switches to the Proof-of-Stake consensus algorithm. That is, as we have also announced as Kriptokoin.com, these ETHs will remain staked until Merge happens. There are also allegations that the key to the 35,000 ETH token wallet has been lost by StakeHound.
What does Chapter 11 bankruptcy proceedings mean?
Celsius CEO Alex Mashinsky signed a document stating that the company may sell Bitcoin (BTC) mined by the Celsius Mining Bitcoin mining business to “build enough assets” to repay at least one of its loans and generate future income for the company. The company estimates that it can generate around 15,000 BTC by 2023.
Swan Bitcoin founder Cory Klippstein condemns both Celsius and Voyager’s decision to file for Chapter 11 protection instead of the Securities Investor Protection Act (SIPA). Klippstein said in a tweet on July 14 that filing under SIPA would transfer ownership of the firm’s assets to customers, which would have given them back at least some of their deposits.
Under Chapter 11 bankruptcy proceedings, the company seeking protection claims ownership of all assets. According to SIPA, a failing firm must either transfer its accounts to another firm or be liquidated, sending funds to investors.
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