Crypto site Celsius has filed for bankruptcy and is missing $ 1 billion

The Celsius cryptocurrency, whose bankruptcy was announced on July 14, is not done with the bad news: its accounts indicate it lacks more than a billion dollars to repay its debt.

Celsius has just declared bankruptcy. There is already one enough bad news in itself. But analysts have realized another detail, much more annoying: Celsius would miss out on more than $ 1 billion.

According to information released during its bankruptcy declaration (a move heavily regulated by US law), the company would be heavily indebted and it would miss out on more than a billion dollars to be able to repay all of its customers. . And that rightly worries cryptocurrency owners.

Celsius customers are not sure they can get their money back. // Source: Canva

What happens to Celsius?

To fully understand the situation, we must begin by remembering a few details. Celsius, a very popular cryptocurrency lending platform (it had over a million customers), announced quite unexpectedly in June 2022 that it was freezing withdrawals. Since then, it is impossible for customers to get their money back, which is blocked in their account.

Following this news, rumors spread about the company’s poor financial situation, and it turned out to be true when the company filed for bankruptcy on July 13th. More specifically, Celsius used a procedure called “Chapter 11”, which under US law allows it to take advantage of certain benefits.

Thus, even if the company is officially bankrupt, it may continue certain activities if it obtains the consent of a judge. So far, Celsius says it has obtained legal approval to continue paying its employees a salary (which is fortunate for those affected), but its customers still cannot withdraw their money (which is much less encouraging).

Their concern was heightened by certain documents published by Celsius. When the company filed for bankruptcy, the company released a large number of documents reporting its accounts. By analyzing them, specialists have realized several things. Already the extent of Celsius’ debt: the platform owes $ 5.5 billion, including 4.7 only to its customers. And above all, of the company’s funds, which only reach 4.3 billion. Insufficient.

An excerpt from Celsius’ documents showing a deficit of $ 1.2 billion. // Source: Numerama screenshot

A situation due to “bad decisions”

Celsius would therefore lack $ 1.2 billion to be able to reimburse everyone, and many customers have fear of never being refunded. As things stand at the moment, Celsius would have to find other creditors to provide sufficient liquidity to repay all this debt and there is no guarantee that it will be possible.

In addition, there is another uncertainty: part of Celsius’ funds consist of Cel, the platform’s original cryptocurrency. However, the value of the latter has only fluctuated since the announcement of Celsius’ bankruptcy – which means that the company’s cash flow could be affected if Cels falls sharply.

In some of the documents that Decrypt was able to see, Celsius explained how she got into this situation, indicating that the number of assets to be managed had increased faster than she had expected. ” Looking back, the company made poor asset management decisions “, We can read. It was these decisions that would have left the company in a difficult situation, ” with large debts in a declining market environment Bad decisions that now have very serious consequences.

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