Celsius Network Acknowledges $1.2B Hole in Balance Sheet

Celsius Network, the liquidity-strapped crypto lender that suspended withdrawals has a $1.2 billion hole in its balance sheet, according to a new court filing from the company’s advisory partner, Kirkland & Ellis.

iexclusivenews reports that according to the papers submitted to the U.S. Bankruptcy Court for the Southern District of New York.

Celsius has assets worth $4.3 billion and liabilities around $5.5 billion.

This online news outlet understands that Celsius stated that it has roughly $600 million in its CEL coin on its list of assets.

The business did point out in the report that CEL’s entire market valuation as of July 12 was about $170.3 million.

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According to a document submitted by the company’s counsel, Celsius has a $1.2 billion deficit.

Kirkland & Ellis one of several businesses that have been severely impacted by the continuing liquidity issue in the cryptocurrency industry is Celsius.

It stopped withdrawing deposits on June 12, consulted restructuring specialists about its financial predicament, and on Wednesday, filed for bankruptcy protection.

Crypto exchange FTX allegedly withdrew from discussions over a prospective acquisition of Celsius while the company was seeking answers to its financial problems, citing a “$2 billion hole” on Celsius’ balance sheet.

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However, iexclusivenews Nigeria reports that as part of a treasury-management strategy to regain control of its assets tied up as collateral for the loans.

Celsius started to make good on its obligation to the decentralized finance (DeFi) protocols Aave, Compound, and Maker.

In order to close its final loan on Tuesday, the cryptocurrency lender paid $223 million to Maker, $235 million to Aave, and $258 million to Compound.

Due to this, the company was able to regain tokens worth about $1.4 billion, the majority of which were held in the form of wrapped bitcoin (wBTC) and a certain sort of staked ether derivative (stETH).

Ryan Preston Dahl, a restructuring expert at the law firm Ropes & Gray LLP, told CoinDesk TV’s “First Mover” program that Celsius is going into “uncharted territory” in filing for Chapter 11 bankruptcy protection because there has not been a precedent for a crypto brokerage “trying to navigate through a reorganization as opposed to a liquidation.”