The digital asset lender, Celsius, is suffering a deficit of $1.2 billion. Most of its liabilities stem from customer deposits. There are those who think Celsius may never pay the money back. This shocking information came out when Celsius filed for bankruptcy on July 14.
Filing for Bankruptcy
On July 14 the CEO of Celsius, Alex Mashinsky, signed the bankruptcy document (Chapter 11). The filing revealed that the crypto lending firm’s liabilities outweighed their assets. Currently, the firm owes $5.5 billion in liabilities as opposed to possessing assets worth $4.3 billion. There is a deficit of $1.2 billion as a result.
Around $4.72 billion liabilities come from user deposits alone. In terms of assets, crypto assets contribute about $1.75 billion, mining assets add $720 million and CEL tokens contribute another $600 million.
Some traders and experts look at the value of CEL with suspicion. They feel $600 million is too much considering the market cap on the crypto is only $321 million.
Alex Mashinsky also signed a document which allows the company to sell the BTC (Bitcoin) that Celsius’ operations mined. This is an effort to generate enough money to pay at least one of Celsius’ major loans. The crypto firm also hopes this step can generate some revenue for the company’s future.
Criticism from the Community
The founder of Swan Bitcoin, Cory Klippstein criticized the move by Celsius. Klippstein thinks that Celsius, and even Voyager, should have filed for SIPA (Securities Investor Protection Act) instead of the Chapter 11 protection.