- The bankrupt crypto lender Celsius has received multiple offers of fresh cash to help fund its restructuring process.
- According to court papers, the crypto lender forecasts about US$66.4 million of liquidity for August and expects that balance to turn negative in October, with an estimated US$4.7 billion still owed to its users.
It wouldn’t be crypto without some drama.
Although many would have written off Celsius Network to the dust heap of history, it appears that the embattled crypto lender is attempting a second lease of life.
Having filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, Celsius Network has allegedly received multiple offers for fresh cash injects to help fund its restructuring.
Having been burned by a complex myriad of failed decentralized finance or DeFi strategies, as well as being victim to numerous high-profile hacks, Celsius Network needs to raise additional money if it hopes to restructure or sell its business and avoid a liquidation.
According to court papers, the crypto lender forecasts about US$66.4 million of liquidity for August and expects that balance to turn negative in October, with an estimated US$4.7 billion still owed to its users.
As recently as October 2021, Celsius Network’s CEO Alex Mashinsky claimed that the crypto lender had as much as US$25 billion in assets under management, helped in no small part by the skyrocketing prices of cryptocurrencies at the time.
Celsius Network is said to be considering various financing proposals as well, in an effort to try and help its users take advantage of the recent rebound in cryptocurrency prices.
Although Celsius Network’s user base may be worth some money, it’s hard to know if depositors will ever trust centralized cryptocurrency lenders again and that database in and of itself may be of doubtful value.
Just days before Celsius Network filed for bankruptcy protection, its platform was still advertising annual returns of nearly 19% which paid out weekly.
Unsustainable returns helped to lure in new Celsius Network users, and the company claimed that it had as many as 1.7 million customers as of June this year.
Celsius Network also has plenty of creditors, at least according to its bankruptcy filing which revealed that the firm has over 100,000 creditors, many of whom lent the platform cash without any collateral to back up the arrangement.
One of Celsius Network’s biggest creditors is Alameda Research, which is owned by Sam Bankman-Fried, who also owns cryptocurrency exchange FTX.
FTX passed on a deal to purchase Celsius Network after examining the latter’s finances and determining that it could not cover its US$2 billion hole.
Against this backdrop, and given the marked slowdown in cryptocurrency trading activity, it’s hard to see how another white knight nowhere near as connected and embedded in the crypto ecosystem, could hope to turn Celsius Network around, and so, the drama continues.
