Celsius (CEL) is missing $2.8 billion worth of bitcoin and ethereum (ETH)

Last Updated: 16 August 2022

The bankrupt crypto lending company Celsius seems to be running out of money soon. Yesterday, a hearing took place and the documents showed that Celsius can still survive financially until October. In addition, they are 2.8 billion dollars short of bitcoin and ethereum to repay loans.

The law firm Kirkland & Ellis submitted various financial forecasts of the company. According to their estimates, Celsius will run out of money by October.

The bankruptcy of Celsius

Celsius went bankrupt last month and filed for a so-called chapter 11 procedure in the United States. A chapter 11 bankruptcy procedure stops all civil lawsuits and allows companies to draw up a recovery plan while they remain operational. So it’s not like in the Netherlands where bankruptcy means the end or a restart; it’s a ploy to restructure the company financially.

Celsius is a crypto platform on which users can receive interest on their crypto assets, but can also take out loans in crypto. Passive income on your crypto sounds good, but you do expose your crypto to risks of a third party. And let that third party just be in trouble.

Celsius lost bet with synthetic Ethereum

The problems started after Celsius staked Ethereum in a protocol, for which they received stETH in return. These should in theory always be worth as much as the normal Ethereum price. When the crypto market started to collapse in May, the value of sETH also collapsed and it became increasingly difficult to sell this coin one-to-one for ether.

Financial position of Celsius worsened

Since then, Celsius has been working through a restructuring process and exploring ways to pay creditors. Early in the process, documents showed a $1.2 billion hole in the balance sheet, with the company having $4.3 billion in assets but reporting $5.5 billion in liabilities.

But that turned out to be a positive assessment and it seems that the company’s financial position has deteriorated.

USD 130 million up in October

It still has about $130 million in cash in August, but that will run out by October. With all the current operational, capital and restructuring expenses, Kirkland & Ellis expects the company to be almost $40 million in the red by the end of October.
Celsius has big gap in bitcoin and ethereum

Yet the biggest gap is in crypto holdings. The company reported significant differences between assets held and liabilities incurred in the filing, amounting to a $2.8 billion gap in crypto liabilities.

  • The company currently has $348 million in bitcoin, but $2.5 billion in outstanding bitcoin liabilities.
  • There is a spread of about $1 billion between ETH liabilities and the ethers they actually have.
  • There is also a gap of just under $700 million in USDC obligations.
  • The lender also has a gap of USD 625 million in other currencies.
  • Celsius does still have a surplus of wrapped BTC and sETH of USD 557 million and USD 683 million respectively.
  • They also have USD 438 million of their own CEL token on the balance sheet, which gives them some breathing space.

The figures were submitted prior to the second day of the company’s hearing, which was held yesterday. A meeting of creditors will take place on 19 August.

  • Florian Feidenfelder

    Florian Feidenfelder is a seasoned cryptocurrency trader and technical analyst with over 10 years of hands-on experience analyzing and investing in digital asset markets. After obtaining his bachelor's degree in Finance from the London School of Economics, he worked for major investment banks like JP Morgan, helping build trading systems and risk models for blockchain assets.

    Florian later founded Crypto Insights, a leading research firm providing actionable intelligence on crypto investments to hedge funds and family offices worldwide. He is the author of the bestseller "Mastering Bitcoin Trading" and has been featured in prominent publications like the Wall Street Journal, Bloomberg, and Barron's for his insights on blockchain technologies.

    With extensive knowledge spanning the early days of Bitcoin to today's explosive DeFi landscape, Florian lends his real-world expertise to guide both new entrants and seasoned professionals in capitalizing on the wealth-creating potential of crypto trading while effectively managing its inherent volatility risks.

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