Celsius Filed for Chapter 11 Bankruptcy With $1.2 Billion Crater in Balance Sheet

Celsius users are preparing for a legal nightmare as the struggling lender sends an email warning users of impending bankruptcy. On the heels of that, a legal filing made public today highlights a hole in the lending platform’s balance sheet of nearly $1.2 billion.

Celsius Network LLC is a centralized cryptocurrency loan company headquartered in Hoboken, New Jersey. The company operates globally and has offices in four countries. According to an email from users of the cryptocurrency platform, Celsius's lawyers have filed petitions for Chapter 11 bankruptcy, with individual United States state regulators being notified as of Wednesday, July 13, 2022.

As Bitpush previously reported, Vermont's Department of Financial Regulation has issued a warning, reminding consumers that Celsius is "deeply insolvent" and doesn't possess "assets and liquidity." DPR also stated that the crypto firm is not licensed to offer its financial services in the state. Vermont is the sixth state in the U.S. to open an investigation into Celsius, joining Alabama, Kentucky, Washington, New Jersey, and Texas.

Celsius's previous law firm (Akin Gump Strauss Hauer & Feld) was recently replaced with Kirkland & Ellis LLP, the same law firm that assisted Voyager Digital with its bankruptcy filing last week.

Kirkland and Ellis recently published a filing to the U.S. Bankruptcy Court of the Southern District of New York, showing Celsius holds $4.3 billion of assets and $5.5 billion of liabilities. These documents clarify why FTX walked away from the deal to purchase the lender, citing a "two billion dollar hole in their balance sheet," which appears to have shrunk to $1.2 billion.

The news of bankruptcy comes after Celsius Network has managed to pay a debt of $820M to three major cryptocurrency platforms, Aave, Compound, and Maker. Although the release of collateral on these loans should free up some money for the troubled lender, it is still far from enough.

The crypto community worries about the unknown fate of more than 1.7M users, who still have their digital assets locked on the lending platform. Alex Mashinsky, CEO of Celsius Network, has refused to make any comments regarding the situation of depositors' funds. 

Author: Garrett Meifert

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