Celsius Is Hoping for a Bull Market to Repay Customers

0
35
Celsius Is Hoping for a Bull Market to Repay Customers

Key Takeaways

  • Celsius has revealed it plans to reorganize and continue operating rather than face liquidation.
  • The insolvent crypto lender said it will allow customers to withdraw cash at a discount or remain long crypto and wait for another potential bull market.
  • The hearing also revealed a $1.19 billion hole in Celsius’ balance sheet.

During a late Monday bankruptcy hearing, Celsius’ lawyer Patrick Nash told the judge that “all is not lost,” as the firm is aims for a reorganization rather than a liquidation.

Celsius Begins Reorganization

During its first Chapter 11 bankruptcy hearing late Monday, Celsius revealed a $1.19 billion hole in its balance sheet, and customer liabilities amounting to $4.72 billion.

The beleaguered crypto lender with over 1.7 million users filed for bankruptcy on July 13, precisely a month after it halted customer withdrawals due to alleged “extreme market conditions.” In the U.S., Chapter 11 is a form of bankruptcy involving reorganizing a debtor’s business affairs, where the debtor is allowed to continue operating while the business is restructured. 

Underscoring this point during the first bankruptcy hearing, Celsius’s lawyer Patrick Nash said that the lender still plans to land on its feet. “This is not a liquidation. All is not lost. We intend for this be a reorganization,” he said.

In a slide presentation published on Celsius’ bankruptcy website, the firm also noted a $1.19 billion hole in its balance sheet. Namely, as of July 14, Celsius had $5.5 billion in total liabilities—$4.72 billion of which owed to its customers—while having only $4.31 billion in assets. To make customers whole, Celsius allegedly plans to provide them with the option to either recover “cash at a discount” or “remain ‘long’ crypto.”

“The vast majority of our customers are going to be interested in riding out this crypto winter, remaining long crypto,” Nash said during the hearing, adding that users should have the opportunity to recover their assets in full “through an appreciation in the crypto macro environment.” This effectively means that Celsius is hoping for a bull market to grow its total assets’ nominal value, enabling it to potentially repay its customers in full.

According to Celsius’ terms of use, the customers of its “Earn” and “Borrow” programs lawfully transferred the ownership of their coins to the lender when depositing, giving it the full right to “to use, sell, pledge, and rehypothecate those coins.” This means that Celsius depositors could be treated as unsecured creditors in the event of insolvency and potential liquidation.

In a statement part of the bankruptcy filing, Celsius CEO Alex Mashinsky admitted that the firm had made investment decisions that, in retrospect, proved to be detrimental. “The amount of digital assets on the Company’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,” he said.

Disclosure: At the time of writing, the author if this piece owned ETH and several other cryptocurrencies.

The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.

See full terms and conditions.

Celsius Has Paused Customer Withdrawals

The development follows weeks of rumors that the crypto lender could face insolvency issues due to the decline in the crypto market.  Celsius Customers Blocked From Accessing Funds  Celsius appears…

Celsius Has Paused Customer Withdrawals

Celsius Unveils Recovery Plans in Bankruptcy Hearing

News

A document has revealed that Celsius customers will be able to claim partial balances in cash or go long on crypto. Celsius Has Plans for Recovery Celsius representatives appeared in…

Celsius Unveils Recovery Plans in Bankruptcy Hearing

News

Celsius announced it had filed for Chapter 11 bankruptcy early Wednesday. Multiple Celsius customers have taken to social media to share their woes following the update.  Celsius Files for Chapter…

“I Am Suicidal”: Celsius Customers Respond to Firm’s BankruptcyÂ...

EquitiesFirst Owes Celsius $439M: Report

Celsius is owed $439 million from a single counterparty, EquitiesFirst, which has been paying off its debt by $5 million each month. Celsius involuntarily became EquitiesFirst’s creditor when the investment…

EquitiesFirst Owes Celsius $439M: Report

Read More

LEAVE A REPLY

Please enter your comment!
Please enter your name here