Celsius bankruptcy details disclosed: LUNA returns to zero, Three Arrows loan liquidation, high-priced mining machines


Details of how the company with 1.7 million users went bankrupt were widely disclosed, according to documents filed with the U.S. Bankruptcy Court for the Southern District of New York by Celsius consulting partner Kirkland & Ellis.

As of July 2022, Celsius had 1.7 million registered users and 300,000 active users with balances over $100, paying about 5% in financial incentives. Celsius has 23,000 retail borrowers with 411 million outstanding loans and 765 million collateral; the company has 47 institutional borrowers with 93 million outstanding loans and 98.5 million collateral.

Celsius has assets of $4.3 billion and liabilities of $5.5 billion, or a shortfall of $1.2 billion, the filing shows. Among them, non-user assets are only $780 million. FTX had previously considered buying Celsius, but backed off after learning about its financials, citing a $2 billion hole in Celsius’ balance sheet.

Celsius invested a significant amount of its client money (a $750 million line of credit) in its own mining operations, with $576 million outstanding as of the end of May, documents show. There are currently 80,850 mining machines, 43,632 of which are in operation. It is worth noting that Celsius miners were mostly purchased in 2021, and the price of these miners is currently dropping by more than 50%.

In 2021, a misstep by Eth2 staking provider StakeHound cost Celsius over 38,000 ETH.

Celsius lost less in the LUNA crash event, losing only $15.8 million due to the rapid withdrawal of UST. However, due to market rumors about LUNA, Celsius was withdrawn over $1 billion within 5 days, causing a run.

Celsius provided two loans totaling $75 million to Three Arrows Capital, and when 3AC failed to meet the margin call, Celsius liquidated the collateral held by 3AC, incurring a loss of $40.6 million.

Tether provided Celsius with a loan of up to $841 million. Celsius incurred a loss of $97 million in liquidation. But at the time of this drop, it was clear that Tether liquidated directly and did not play the “white knight” again.

Celsius borrowed money from a private lending platform from 2019 to 2021, but when Celsius tried to repay the loan in 2021, the other party said it could not repay the collateral. As a result, the lender owes Celsius $361 million and 3,765 bitcoins. The document did not disclose the name of the platform.

“While the company (Celsius) was instructed to only make market-neutral trade deployments, certain asset deployment decisions were made during its unexpected asset growth period, which proved problematic in hindsight,” the document said. While the company took the necessary steps to “unwind” these deployments, unfortunately, the damage has already been done.

Crypto lawyer @wassielawyer said that comparing the claims submitted by Voyager and Celsius, Voayger made a huge mistake (3AC Loan) and faced it. Celsius, on the other hand, has conducted a series of junk transactions, blaming the current woes on falling prices and negative news.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/celsius-bankruptcy-details-disclosed-luna-returns-to-zero-three-arrows-loan-liquidation-high-priced-mining-machines/
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