According to crypto investigative journalist Otterooo, Celsius CEO Alex Mashinsky lied just before Celsius filed for Chapter 11 bankruptcy. Citing the bankruptcy filings, Celsius announced that Celsius had already filed for bankruptcy in late 2021.
New developments emerge in Celsius bankruptcy
Otterooo claimed on June 7 that Celsius will go bankrupt by the end of 2022. Shortly after, the platform stopped all user withdrawals and asset swaps on June 12, citing market conditions. On July 13, Celsius filed for Chapter 11 bankruptcy, claiming it was the best way to stabilize the business and achieve success in the crypto industry. But his bankruptcy filings have raised many questions about his practices.
10 July 2022
Celsius hired new “restructuring” lawyers, Kirkland & Ellis
the same lawyers Voyager used to take themselves bankrupt
Source WSJ https://t.co/cv6xkp0F30
— otteroooo (@otteroooo) July 17, 2022
According to Wall Street Silver, the company owed its users about $4.7 billion. As we reported as Kriptokoin.com, CEO Mashinsky reported a gap of approximately $ 1.2 billion in his balance sheet. However, Otterooo believes the hole may be much larger than the number provided. He believes the company’s $720 million mining assets claimed in bankruptcy filings are too exaggerated. Also, the $600 million worth of CEL tokens claimed as an asset had no implicit value other than paying off CEL-denominated debt. Celsius is also stuck with over $467M in stETH.
Mashinsky’s claim that he lied
Otterooo also claims that Celsius’ bankruptcy may be a result of their implementation, not the Terra/LUNA collapse. According to Otterooo, CEO Alex Mashinsky lied several times about his solvency. According to him, the company’s top executives were throwing away the CEL tokens instead of keeping them. A Financial Times report corroborates the evidence. The company also allegedly lied about the number of customers and assets under management to inflate its prices. A Market Insider report highlighted that Celsius has requested a bailout from FTX CEO Sam Bankman-Fried. SBF reportedly withdrew from the deal after looking at the state of the balance sheet.
Meanwhile, Celsius Network’s filing for bankruptcy could create more problems for the crypto mining industry, especially if it decides to sell its own mining unit. Celsius’ mining subsidiary has also filed for Chapter 11 bankruptcy protection, showing it has 80,850 mining rigs, of which 43,632 are in operation. It expects to increase its mining capacity to around 120,000 rigs and generate more than 10,000 Bitcoins by the end of the year. This makes Celsius one of the largest miners in the industry. But the firm’s financial problems may force it to dump parts or even the entire mining business. This means more pressure on an industry that is already facing low profitability and falling prices of mining rigs.
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