Crypto lender Celsius reveals $1.67 billion hole in bankruptcy filing

WASHINGTON (REUTERS) – Celsius Network listed a US$1.19 billion (S$1.67 billion) deficit on its balance sheet in a bankruptcy court filing on Thursday (July 14), a day after the cryptocurrency lender filed for filed for bankruptcy protection, or Chapter 11.

Celsius froze withdrawals last month, citing “extreme” market conditions, cutting off access to savings for individual investors and sending tremors through the crypto market.

In the filing at the United States Bankruptcy Court for Southern District of New York on Thursday, Celsius also said it had US$40 million in claims against Singapore-based Three Arrows Capital, a crypto hedge fund that filed for bankruptcy earlier this month.

As at July 13, Crypto had about 23,000 outstanding loans to retail borrowers totalling US$411 million backed by collateral with a market value of US$765.5 million in digital assets, it added.

Crypto lenders boomed during the Covid-19 pandemic, drawing depositors with high interest rates and easy access to loans rarely offered by traditional banks. They lent out tokens to mostly institutional investors, making a profit from the difference.

But the lenders’ business model came under scrutiny after a sharp crypto market sell-off spurred by the collapse of major tokens TerraUSD and Luna in May.

Another US crypto lender, Voyager Digital, filed for bankruptcy this month after suspending withdrawals and deposits. Vauld, a smaller lender in Singapore, also froze withdrawals this month.