Bitcoin and altcoin lending platform Celsius has filed for Chapter 11 bankruptcy. Celsius suspended withdrawals about a month ago. So far, it turns out that every crypto lender that suspends withdrawals has gone bankrupt. So, according to experts, there is no reason to assume that Celsius will be different. Francis Coppola, an expert, shared his thoughts on this subject. Here are the details…
Coppola reviews the latest developments for altcoin project Celsius
At the same time, as we reported as Kriptokoin.com, it turned out that the company had a deficit of $ 1.19 billion. According to Coindesk in May, the company said Celsius has “customer assets” and $12 billion in what Coindesk calls “assets under management” and has lent $8 billion to customers. So “assets under management” seems to have dropped by $2 billion. Could this loss be $2 billion?
Celsius’ bankruptcy filing cleared up a mess. Accusations that the crypto lender is operating a “shadow bank” have now been targeted by a prominent crypto critic, Frances Coppola. Credit firm Celsius filed for Chapter 11 bankruptcy earlier this week. The documents revealed a $1.2 billion deficit in the balance sheet. This was one of the reasons FTX stopped potential acquisition. According to the document, the company currently has $4.3 billion in assets versus $5.5 billion in debt.
Frances Coppola, a prominent economist and longtime crypto critic, does not believe that depositors will get their assets back. She accused Celsius of working as a “shadow bank”. Coppola used the following statements:
Celsius is not an asset manager, it’s a shadow bank. And deposits in banks are not even “customer assets,” let alone “assets under management.” These are unsecured loans to the bank. So these are the bank’s debts and are at risk of complete bankruptcy.
Is Celsius actually a “bank”?
Celsius Network has $1.75 billion in cryptocurrencies and $720 million in mining assets. Although the lender claims to have $600 million worth of CEL tokens, the shrinking market cap and falling price didn’t help the company’s difficulties. CEL’s market value fell to $185 million.
Industry experts suggest Celsius should opt for the Securities Investor Protection Program (SIP) over Chapter 11 bankruptcy. Swan Bitcoin founder Cory Klippstein also said that SIP filing will help customers with their rights to own their assets on the platform. During Chapter 11 bankruptcy, Celsius owns these assets. Klippstein said this would be in the interests of both Celsius and Voyager Digital users. He argued that all cryptocurrencies are securities and therefore there may be those who will receive the first payment.
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