Celsius’s Working Capital Will Dry Up By October: Filings Reveal

Troubled crypto lender Celsius is in even worse financial condition than previously indicated, a new court filing shows. According to the filing, the crypto company not only has $2.8 billion in crypto liabilities but would also run out of cash in less than three months. 

Celsius has $2.8 billion in Crypto Liabilities

A new court filing from Kirkland & Ellis, the law firm tasked with the crypto lender’s restructuring efforts, has revealed that Celsius’ financial condition is worse than initially suggested. Earlier documents had indicated that Celsius has a $1.2 billion gap in its balance sheet, but the new filing suggests the company has $2.8 billion in crypto liabilities. 

The filing shows that the crypto lender has a huge hole in its bitcoin holdings. Celsius had previously disclosed it owes $2.5 billion in bitcoin (104,962 BTC), but the filing shows it holds $348 million in bitcoin (14,578 BTC) and $557 million in a type of bitcoin derivative (23,348 WBTC).

Celsius also has around $1 billion less in ether (ETH) than it owes to depositors but holds 410,000 stETH, an ether derivative token. The hole in USDC stablecoin holdings accrues to $700 million.

The crypto lender also has 658 million CEL tokens, which is its native token. According to the filing, Celsius owes 279 million of the tokens to clients, leaving the firm with a 379 million surplus. However, since a huge portion of the token’s supply is locked up and there is not much liquidity on exchanges, the CEL holdings could hardly help. 

Aside from its $2.8 billion crypto liabilities, Celsius is also on its way to run out of cash by October. In the monthly cash flow forecast, Kirkland & Ellis revealed a beginning cash balance of almost $130 million at the start of August. However, by the end of October, the law firm forecasts it would have liquidity of negative $33.9 million.

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Celsius Played Up Value of its Mining Operation as Part of Reorganization Plan

Celsius filed for Chapter 11 bankruptcy in mid-July, more than a month after freezing customer assets in the wake of sharp turbulence in the crypto market that came after the catastrophic implosion of Terra. At the time, the crypto lender said that it had anywhere between $1 billion and $10 billion in assets and liabilities and more than 100,000 creditors. 

The company’s first-day court hearing took place on July 19. In the hearing, the crypto lender reportedly played up the value of its also-indebted Bitcoin mining company. It suggested that much of Celsius’ plan to fill its hold depends heavily on the projected future profits of its half-finished mining subsidiary, Celsius Mining. Patrick Nash, a lawyer representing Celsius told the court:

“We definitely expect that the vast majority of our customers are going to be interested in riding out what you’ve heard referred to as this crypto winter, remaining long crypto [and] having the opportunity to realize their recovery through an appreciation in the macro crypto market.”

Do you think Celsius would proceed to sell user funds once it runs out of cash? Let us know in the comments below.