Crypto site Celsius has filed for bankruptcy, and is $1 billion short

The Celsius crypto platform, whose bankruptcy was announced on July 14, is not done with the bad news: its accounts indicate that it lacks more than a billion dollars to repay its debts.

Celsius has just declared bankruptcy. It is already a enough bad news in itself. But analysts have realized another detail, much more annoying: Celsius would miss more than 1 billion dollars.

According to information made public during its declaration of bankruptcy (a step highly regulated by American law), the company would be very heavily in debt, and it would miss more than a billion dollars to be able to reimburse all of its customers. . And that rightly worries cryptocurrency owners.

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Celsius customers aren’t sure they can get their money back. // Source: Canva

What’s going on with Celsius?

To fully understand the situation, we must begin by recalling a few details. Celsius, a very popular cryptocurrency lending platform (it had over a million customers), completely unexpectedly announced in June 2022 that it was freezing withdrawals. Since then, it is impossible for customers to recover their money, which is blocked in their account.

After this news, rumors of the company’s poor financial condition spread, and proved true when, on July 13, the company filed for bankruptcy. More specifically, Celsius used a procedure called “Chapter 11”, which, according to American law, allows it to benefit from certain advantages.

Thus, even if the company is officially bankrupt, it can continue certain operations, if it receives the agreement of a judge. For now, Celsius says it has obtained legal approval to continue paying its employees a salary (which is fortunate for those affected), but its customers still cannot withdraw their funds (which is much less encouraging).

Their concern was reinforced by certain documents made public by Celsius. When filing for bankruptcy, the company released a large number of documents reporting on its accounts. By analyzing them, specialists have realized several things. Already, the extent of the debts of Celsius: the platform owes 5.5 billion dollars, including 4.7 just to its customers. And, above all, that of the company’s funds, which only reach 4.3 billion. Insufficient.

An excerpt from Celsius’s documents, showing a deficit of $1.2 billion. // Source: Numerama screenshot

A situation due to “poor decisions”

Celsius would therefore be short $1.2 billion in order to be able to reimburse everyone, and many customers have fear of never being reimbursed. As things currently stand, Celsius would have to find other creditors in order to obtain enough liquidity to repay all these debts, and there is no guarantee that this will be possible.

Added to this is another uncertainty: part of Celsius’ funds are made up of Cel, the platform’s native cryptocurrency. However, the value of the latter has only fluctuated since the announcement of Celsius’ bankruptcy – which means that the company’s cash flow could be affected if the Cel falls sharply.

In part of the documents that Decrypt was able to see, Celsius explained how she got into this situation, indicating that the number of assets to manage had increased faster than she had anticipated. ” Looking back, the company made poor asset management decisions “, can we read. It was these decisions that would have left the company in a difficult situation, ” with large debts in a declining market environment “. Bad decisions that now have very serious repercussions.

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