A document from Celsius’s law firm reveals accounts even more disturbing than when the company filed for bankruptcy a month ago.
Bad news for the 1.7 million users of Celsius. The financial horizon for the cryptocurrency lending platform, which declared bankruptcy a month ago, is even worse than expected.
Celsius’s law firm, Kirkland & Ellis, has indeed published a document that reports on the economic health of the company. We thus learn that contrary to the announcement in mid-July of a $1.2 billion hole in its cryptocurrency holdings, the latter would ultimately be $2.84 billion.
Specifically, the company has liabilities of $6.67 billion (essentially this is money the platform owes its customers) for total assets of just $3.83 billion under management (l money she actually has). For example, Celsius had $348 million in bitcoins at the end of July for $2.5 billion in debt in bitcoins, the figures being $713 million in ether for $1.8 billion in debt in this cryptocurrency.
In addition, according to the same document, the company plans to have a cash balance of 130 million dollars at the beginning of August, which should increase to 90 million at the beginning of September and then 40 million at the beginning of October. The law firm expects the company to run out of cash by the end of October.
Since the revelation of these documents, first by the specialized media The Block, the course of the celsius cryptocurrency which had gained more than 6000% in the space of two months, in particular because of the forced liquidation of those who bet on a fall in the price (or “short squeeze”), is a loss of momentum. Since Tuesday, the cryptocurrency has lost more than 8% of its value, trading around $2.40 as of 4:00 p.m. Wednesday.
As a reminder, on June 12, in a context of strong tension on the cryptocurrency market, the lending platform for 1.7 million users froze withdrawals on its platform. Desperate, some customers have sent letters to the judge in charge of the case over the past few weeks, hoping to recover their funds.
Celsius was one of the main cryptocurrency lending/staking platforms, which allowed you to lend your cryptocurrencies on a blockchain against interest. The company offered interest rates over 18% for savers, but only 0.1% for borrowers.