Celsius’ Bankruptcy File Reveals More Untold Stories of Failures

Sequel to the earlier report that Celsius had filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code, the debtor has provided more information about what transpired behind the scene.

Firstly, Celsius acknowledged that the company grew too rapidly, attracting more funds than anticipated. This resulted in short-sighted managerial decisions that hampered its business operations. In perspective, the crypto lender grew from $50 million in deposits in 2018 by 20,000% in three years.

The confession reads:

Celsius’ early success was not without its hiccups.  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.  Some of these deployment activities took time to unwind and left the Company with disproportional liabilities.

The company further noted that while they tried to manage the situation, the increased negative media attention they received following the Terra LUNA collapse added salt to their wound. False, misleading stories made users wary of  Celsius’ platform. They contributed to accelerated withdrawals of over $1  billion from the platform over five days in May 2022, when distrust of cryptocurrency was at an all-time high. 

In like manner, the value of its native token, CEL, declined, resulting in a reduction of assets on Celsius’ balance sheet. 

By mid-June, the amount of the company’s liquid assets and the dollar value of all remaining assets had decreased so significantly that Celsius lost the ability to continue borrowing stablecoins, loading the magnitude of crypto assets necessary to match crypto liabilities.

On the bright side, under Exhibit J, no actions are pending or threatened against the company or its properties as of the petition date.