For those unaware Celsius has filed for Chapter 11 Bankruptcy. Usually what that means is a company is broke and can't find a way out of the hole they dug themselves into so they want to stop the bleeding and ask the US Government for some help.
Why did they go bankrupt?
Because they owe their users 4.7 billion dollars
They also have a 1.2 billion dollar gap in their balance sheet.
“Today’s filing follows the difficult but necessary decision by Celsius last month to pause withdrawals, swaps and transfers on its platform to stabilize its business and protect its customers. Without a pause, the acceleration of withdrawals would have allowed certain customers – those who were first to act – to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery," the statement read.
What is interesting is that they have stated they have $167 million in cash on hand and they are asking the courts to allow them to continue business as usual and keep paying their employees and such while they figure out what to do next.
On June 12, 2022, we made the difficult but necessary decision to pause withdrawals, Swap, and transfers on our platform to stabilize our business and protect our customers.
Most account activity will be paused until further notice. Withdrawals, Swap, and transfers between accounts will remain paused, and rewards will stop accruing as of the date of the filing. Celsius is not requesting authority [from the bankruptcy court] to allow customer withdrawals at this time.
What is interesting to note is that on July 1st, 2022 Three Arrows Capital filed for bankruptcy. On July 6th Voyager Digital also filed for bankruptcy. I am curious if this has to do with Pandemic or inflation in the US.
Here is another interesting tidbit I found from Cointelegraph:
User deposits made up the majority of liabilities at $4.72 billion, while Celsius' assets include CEL tokens as assets valued at $600 million, mining assets worth $720 million, and $1.75 billion in crypto assets.
That leads me to believe that Celsius has $720 million worth of mining rigs for mining BTC or ETH or other cryptos. It isn't necessarily surprising but just insightful.
Celsius CEO Alex Mashinsky signed a document stating that the company could also sell Bitcoin (BTC) mined by its Celsius Mining Bitcoin mining operation to “generate sufficient assets” to repay at least one of its loans and provide revenue for the company in the future. The company projects that it could generate about 15,000 BTC through 2023.
I am not a bankruptcy expert or even a financial person at all. But this high profile bankruptcy is very intriguing to watch from the sidelines. I never interacted with Celsius so I have no skin in this game. I wish all who had their crypto on Celsius the best of luck. However I would be remiss if I didn't point out... Not your keys not your Crypto....
