(Bloomberg) — Bankrupt cryptocurrency lender Celsius Network Ltd. disclosed more details on its collapse, including that it has a $1.19 billion deficit on its balance sheet.
The platform held about $4.3 billion of assets against $5.5 billion of liabilities as of Wednesday, according to a court filing. It suffered from a series of unexpected losses, including losing 35,000 of Ether tokens due to the misplacement of “keys” by its staking service provider StakeHound.
“The amount of digital assets on the company’s platform grew faster than the company was prepared to deploy,” Chief Executive Officer Alex Mashinsky said in a sworn declaration that details the path that led Celsius to bankruptcy. “As a result, the company made what, in hindsight, proved to be certain poor asset deployment decisions.”
Read More: Celsius Bankruptcy Filing Shows Long Reach of Bankman-Fried
Going forward, Celsius may sell assets and consider investment from third-party strategic or financial investors in exchange for equity in a reorganized company, the filing says. It also intends to use Bitcoin minted by mining as one way to address its deficit.
The company has been trying to obtain new financing from third parties, but those talks made clear that a bankruptcy protection was necessary, Mashinsky said. Celsius has about 1.7 million registered users, including approximately 300,000 active users with account balances greater than $100, the filing shows.
Counterparties
Celsius has unwound nearly all of its loans at decentralized finance platforms and a $108 million loan collateralized by $403 million in digital assets with crypto exchange FTX, it says. The majority of its liabilities are related to user accounts. It plans to engage with a committee of unsecured creditors, which it says will likely include mostly users, to “build consensus” around its future plan.
The collapse of Three Arrows Capital also impacted Celsius, which has a $40 million claim against the crypto hedge fund, the filing says.
During the recent market crash, stablecoin issuer Tether issued a margin call to Celsius on a $841 million loan outstanding. Celsius decided not to provide additional collateral and agreed to a liquidation and settlement of the loan, which resulted in a loss of $97 million, the filing shows.
(Updates with details on Three Arrows, Tether)
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