Celsius has crashed

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July 20, 2022

Celsius, at one time, made a splash in the crypto industry. This platform has become one of the few that has started issuing crypto loans. Despite its reasonably considerable popularity, it failed. It announced a substantial hole in the budget and then filed for bankruptcy.

Details

On July 13, Alex Mashinsky, the platform’s founder, released a report showing a budget deficit of 1.2 billion USD. The very next day, the company filed for bankruptcy.

According to released documents, the company has 4.3 billion USD in assets and 5.5 billion USD in liabilities (to customers and creditors).

This situation occurred due to market instability, uncontrolled growth of the site, and due to ill-conceived investments. As previously reported, the company lost more than 390 million USD in client funds on DeFi and NFT.

In addition, it was recently reported that Celsius in June sold mining power, which was recently bought, at a ridiculous price, well below the market price (a batch of 6000 was sold at 28 USD per thousand, and the second group of 5000 changed hands in hands at 22 USD per thousand, while the market value is 50-60 USD).

The company’s management said that it has paid off all obligations to DeFi and NFX.

Celsius also issued a considerable loan to Three Arrows Capital, which filed for bankruptcy earlier this month.

It was previously reported that the company’s management and other crypto organizations, such as Alameda Research, are trying to stabilize existing problems. Still, as we can see, this has not yielded results. Also, the FTX exchange expressed its willingness to support or absorb Celsius but abandoned this idea after studying the financial documentation.

In mid-June, Celsius suspended all transactions between accounts amid a 50% drop in the value of the token, and a month later, the company filed for bankruptcy in a New York court.

What’s next for Celsius?

The board of Celsius hopes that the debt restructuring will allow the company to get back on its feet and return to its previous positions in the future. Currently, it has enough funds to carry out debt restructuring operations.

Most of the platform’s operations are suspended, but it continues to work. It is worth saying that the token’s value after the declaration of bankruptcy decreased by 17%.

Experts are not yet in a hurry to assess the likelihood that the company will be able to get out of this situation. It made enough mistakes during the crypto winter that led to such problems. Today it will be challenging to attract at least some large investors, as the confidence level has dropped significantly. So far, no mechanisms are visible that would make it possible to obtain additional income to pay off existing loan obligations and start normal functioning.

It is worth saying that the number of crypto companies that declare bankruptcy is growing exponentially. It is assumed that the situation will unlikely change until the crypto winter’s end.

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