Celsius Network reveals 1.2 billion US dollar deficit in bankruptcy registration

The crypto loan Celsius Network has uncovered a $ 1.2 billion hole in its balance sheet, which was caused by what managing director Alex Mashinsky described as "bad" investments and other "unforeseen" losses.

Celsius made the disclosure when US bankruptcy protection applied for the protection of the insolvency this week after it frozen customer funds in June. It is the youngest victim of the crash on the cryptoma markets that have forced two other large companies into bankruptcy in the past few weeks.

Mashinsky, who founded Celsius in 2017, opened the extent of the problems of the company based in New Jersey on Thursday. It had liabilities of $ 5.5 billion and assets of only $ 4.3 billion.

The vast majority of liabilities, $ 4.7 billion, was attributed to Celsius users. The submission indicated that they could be confronted with considerable losses and made the company's problems attribute to a mixture of bad bets, market conditions and a failure in coping with its rapid growth.

"The amount of digital assets on [Celsius’s] platform grew faster than the company wanted to provide. As a result, the company made decisions that have subsequently proved to be bad decisions to provide assets," wrote Mashinsky in the file.

Celsius was one of a handful of crypto creditors who have deducted crypto assets worth billions of dollars from ordinary investors in recent years. It promised interest rates of up to 18 percent to certain cryptocurrencies.

Canada's second largest pension fund, Caisse de Dépôt et Placement du Québec, and the investment company Westcap carried out an equity financing round of $ 600 million last year, which Celsius rated $ 3 billion.

The lender is the third large crypto company that registers bankruptcy after the crypto broker Voyager Digital and the HedgeGry Arrows Capital. All three were hit on the market by collapsing crypto-asset prices and freezing loans.

Mashinsky admitted a number of mistakes on Thursday that led to losses and detailed investments that had led to Celsius could not return money to customers because it had a bank run this year.

One was a loss of $ 510 million that was discovered in 2021 when Celsius tried to reclaim collateral that had promised to cover loans from a non -mentioned "private loan platform".

"The lender could. He added about $ 440 million of it.

Celsius also suffered losses of $ 100 million, as collateral to secure a loan from Tether-the StableCoin emittent, who was an equity investor in Celsius-have been sacrificed in the past few months.

Mashinsky said that about $ 1 billion of its funds were illiquid because they were intended for the company's Bitcoin mining operation or have been invested in a version of the Ethereum network that has not yet started.

he suggested that Celsius' restoration plan could include the use of Bitcoin that is generated from his mining operations to “address its current cryptocurrency deficit”.

He not only admitted the company's mistakes, but also encouraged “misinformation” in the media and on social media to have encouraged customers to withdraw funds worth around $ 1 billion in May.

Mashinsky said Celsius was on the way to tackling his problems when the market was turning this year.

"The company believes that it would have been successful in the near future if the market had remained relatively stable."