A new report from the Financial Times states that Celsius has a $1.2 billion hole in its balance sheet. Users, what does that mean? If you don't see any money back, you're not getting all your money back.
$4.7 billion of the $5.5 billion of liabilities is owed to Celsius users, according to the company's Chapter 11 filing. The problem is that Celsius lists just $4.3 billion of assets, many of them illiquid, and that's even assuming those have been calculated correctly. Celsius has taken a nosedive in the past year and a large part of its holdings is in its own token. Roughly $1 billion of assets are tied up in the company.
Celsius was notorious for offering high interest rates, but it has to make riskier bets to make up for it. All the money went somewhere. The company made bad bets.
Some of Celsius'cryptocurrencies are tied up in long term and illiquid deployment activities, some of them have been lent to third parties, and some of them have been pledged in support of borrowings or sold to generate cash.
Due to the variety of asset deployment strategies the Company engaged in, including the terms and length of time, they were unable to both meet user withdrawals and provide additional collateral to support its obligations.
Users who signed up for Celsius all agreed to terms of service that allowed Celsius to stop withdrawals at any time, according to the filing. It is a bit shocking to see all the details in the paperwork.
The terms of use that form the basis of the contract between Celsius and its users explicitly state that in exchange for the opportunity to earn rewards on assets, users transfer “all right and title” of their crypto assets to Celsius including “ownership rights” and the right to “pledge, re-pledge, hypothecate, rehypothecate, sell, lend, or otherwise transfer or use” any amount of such crypto, whether “separately or together with other property”, “for any period of time,” and “without retaining in Celsius’ possession and/or control a like amount of [crypto] or any other monies or assets, and to use or invest such [crypto] in Celsius’ full discretion.” A version of this statement has been in every version of Celsius’ “Terms of Use” since 2018. And since 2019, the Company has been clear that it might “experience cyber-attacks, extreme market conditions, or other operational or technical difficulties which could result in immediate halt of transactions either temporarily or permanently.”
Did you get all that? Celsius held it for you and you weren't buyingcryptocurrencies. There was a transfer of the right and title to the company.
You won't see how much Celsius executives took out of their own token over the past few years in the bankruptcies. According to a recent report by the Financial Times, Alex Mashinsky, the company's co- founder and CEO, has sold about $44 million worth of Celsiuscryptocurrencies.
Where does all of that leave people? No one knows for certain. They are all hoping to get something from the mess. Celsius wants to reorganize and return to being a company after this is done. It is hard to imagine anyone would want to invest their money in a place like that.
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