Complications appear amid dwindling hopes of recovery
Celsius recovery plan in bankruptcy
Modified Date:- Published Date:-Categories: Cryptocurrency
Complications appearamid dwindling hopes of recovery
The Celsiusbankruptcy proceedings The Celsius Network is one of several crypto lending firmsthat have been swept away in the wake of the so-called "cryptotransition". Rumors of Celsius bankruptcy began to spread in Juneafter the cryptocurrency lender was forced to halt withdrawals due to "extrememarket conditions" and eventually filed for Chapter 11 bankruptcya month later on July 13.
Thecrypto lending firm showed a balance gap of $1.2 billion in its bankruptcyfiling, with most of the liabilities owed to its users. Most of the liabilities in userdeposits are $4.72 billion, while Celsius' assets include the CEL token, whichis worth $600 million, mining assets $720 million and $1.75 billion in crypto assets. The value ofthe CEL tokens has drawn suspicion from some in the crypto community, however,as the entire market cap for CEL is only $494 million, according to CoinGeckodata.
A newbankruptcy report filed nearly a month after its Chapter 11 bankruptcy filinghas revealed that the crypto lender's actual debt is more than double what thefirm showed in July. The report found that the company has totalliabilities of $6.6 billion and total assets under management at $3.8 billion.When filing bankruptcy, the firm showed about $4.3 billion in assets against$5.5 billion in liabilities, representing a difference of $1.2 billion.
Pablo Bonjour,managing director of Macco Restructuring Group, which has worked with severalcrypto firms going through bankruptcy process, explained why Celsius' balancegap widened and what lies ahead for the troubled crypto lender. With itscurrent debt and cash flow, Celsius anticipates that the money will run out byOctober.
A courtfiling shows Celsius' three-month cash flow forecast, which forecasts sharplydwindling liquidity, shows the company will experience a roughly 80% drop inliquidity funds from August to September. According to a report in theFinancial Times, Mashinsky personally directed individual trades and slammedfinancial experts in an attempt to shield Celsius from the expected drop in thecryptocurrency market.
The CEO ofCelsius reportedly ordered the sale of "hundreds of millions ofdollars" worth of bitcoin in one instance, repurchasing the coins at aloss less than 24 hours later. As bankruptcy proceedings reveal morecomplications with the crypto lender, Celsius could face a similar fate to manyof its peers including Voyager, BlockFi and Hodlnot.
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