Celsius Owes Its Users $4.7 billion, Bankruptcy File Reveals

Celsius Network CEO Alex Mashinsky has declared that the firm owes its users $4.7 billion. This revelation comes from the company’s filing for Chapter 11 bankruptcy on Wednesday at the U.S. Bankruptcy Court for the Southern District of New York.

The development occurred soon after Celsius settled its debt to Compound and took back collateral valued at $200 million. Additionally, the business settled Maker Protocol’s loan last week. Furthermore, the company paid back its Bitcoin loan on Monday, releasing $453 million in security.

Celsius’s 61-page court filing revealed that it has liabilities of $5.5 billion and assets of $4.2 billion. Additionally, most penalties are owed to Celsius users, amounting to $4.7 billion.

The court filing hinted that Celsius might face heavy losses. Moreover, the company’s troubles are attributed to market conditions, poorly thought out bets, and mismanagement of its rapid growth.

Mashinsky stated in the filing,

“The amount of digital assets on the platform grew faster than the company was prepared to deploy. As a result, the company made what, in hindsight, proved to be certain poor asset deployment decisions,”

The bankruptcy filing allowed the company to steady its operations and undergo a restructuring deal. The company has $167 million in cash, which will help keep operations running. Furthermore, to enable a smooth transition into Chapter 11, the firm has filed several customary motions with the court. These motions ask the court to permit the company to go on as usual.

Celsius mining also files for bankruptcy

In addition to Celsius Network, the company’s mining unit has also filed for bankruptcy. Celsius mining planned to go public this year. However, the IPO was not successful. As the crypto markets crashed, mining took a hit. Consequently, many miners were forced to sell their holdings at discounted prices. This was a significant blow to Celsius’s plans.

Mashinsky said that around $1 billion of Celsius’s money were illiquid because it had been used to fuel the company’s bitcoin mining activity or investments in an unreleased Ethereum network.

Mashinsky hinted that the recovery strategy for the company might entail utilizing bitcoin produced by its mining activities.

Celsius is the latest crypto firm to find itself underwater and followed by the failures of Voyager and Three Arrows Capital.