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Celsius Balance Sheet Has An Asset-Liability Mismatch Of Nearly $1.2 Billion, Show Court Documents

Celsius’ retained law firm has filed a bankruptcy document in the court today and it showed some insights and factors which led to its collapse. Read below to find out more on this.

 Celsius Balance Sheet Has An Asset-Liability Mismatch Of Nearly $1.2 Billion, Show Court Documents
Celsius Balance Sheet Has An Asset-Liability Mismatch Of Nearly $1.2 Billion, Show Court Documents

Celsius (CEL), the troubled crypto decentralised finance lender (DeFi), which filed for Chapter 11 Bankruptcy two days ago, has now acknowledged that it has about $1.190 billion of deficit in its balance sheet. 

Celsius’ legal advisory partner, Kirkland and Ellis had filed a document in the US Bankruptcy Court of the Southern District of New York. It was revealed that Celsius held $4.3 billion in total assets and $5.5 billion in liabilities. So the total liabilities (what it owes) and total assets (what it owns) has a difference or mismatch of $1.2 billion approximately (1.190 billion).

Here are the other details as revealed in the court document.

Events Which Led To Celsius’ Bankruptcy

The court document revealed several key factors which led to Celsius becoming bankrupt now.

Poor Management: Celsius admitted that its platform grew faster than the company was prepared to deploy. Hence, they made some “poor asset deployment decisions.”

“Some of these deployment activities took time to unwind, and left the company with disproportional liabilities when measured against the unprecedented market declines,” read the document.

External Factors: The fall in value of traditional assets, geo-political crisis due to the Russia-Ukraine war, high inflation, Terra LUNA crash and other external factors further accelerated Celsius’ deteriorating situation.

“The onset of the ‘crypto winter’ combined with the well-publicised collapse of Luna and the failure of several crypto funds/exchanges led to the growing industry-wide reluctance to do business with companies, such as Celsius that held crypto assets,” read the court document.

Long-Tenure Assets: Celsius said that not all of its investments had turned bad, but rather they were tied up in long-term tenure contracts. Some of them were pledged to finance other long-term projects, too.

“Some of Celsius’ crypto is tied up in long-term and illiquid crypto deployment activities; some of Celsius’ crypto assets have been loaned to third parties; and some of Celsius’ crypto assets have been pledged in support of borrowings or sold to generate cash used to acquire Bitcoin mining equipment and the GK8 storage business,” read the court document.

Celsius has in its list of assets shown its own crypto token CEL as assets. At present, it has about $600 million in CEL tokens. However, with the declining prices of CEL tokens, the market cap for the entire CEL circulating supply was just $174 million. As of July 15, 2022 10.04 am, CEL had a market cap of $174,538,062 and its price was up by 31 per cent at $0.7307, as per Coinmarketcap data.

Edited by: Nidhi Sinha

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