Celsius Network reports $1.2bn deficit in bankruptcy filing

Web Desk

16th Jul, 2022. 12:43 am
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Crypto lender Celsius Network files for bankruptcy.
Company says it has $1.2bn hole in its balance sheet due to “poor investments” and other losses.
It is the third major crypto business to file for bankruptcy this week.
All three affected by collapse of crypto asset values and market-wide freezing of credit.

The crypto lender Celsius Network has disclosed a $1.2bn hole in its balance sheet due to “poor” investments and other “unexpected” losses, as described by CEO Alex Mashinsky.

After blocking customer payments in June and seeking US bankruptcy protection this week, Celsius made the announcement. It is the third significant company to file for bankruptcy in recent weeks due to the meltdown of the cryptocurrency markets.

In a 61-page court petition on Thursday, Mashinsky, who co-founded Celsius in 2017, detailed the scope of the New Jersey-based company’s issues. It revealed liabilities of $5.5 billion and assets of only $4.3 billion.

The vast majority of liabilities, $4.7bn, were assigned to users of Celsius. The company’s issues were attributed to a combination of bad bets, market conditions, and an inability to manage its rapid growth, according to the filing.

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“The amount of digital assets on [Celsius’s] 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,” Mashinsky wrote in the filing.

Following crypto broker Voyager Digital and hedge fund Three Arrows Capital, the lender is the third major crypto business to file for bankruptcy. All three have been affected by the collapse of crypto asset values and the market-wide freezing of credit.

Thursday, Mashinsky acknowledged a series of errors that had resulted in losses and outlined investments that had rendered Celsius unable to restore funds to consumers when the company experienced a bank run this year.