Celsius Network reveals $1.19 billion deficit in bankruptcy filing

Celsius Network has just listed a $1.19 billion deficit on its balance sheet in a bankruptcy court filing on Thursday, a day after the cryptocurrency lender filed for Chapter 11.

New Jersey-based Celsius halted all withdrawals last month, depriving individual investors access to their savings, citing “extreme” market conditions.

On Thursday, Celsius has also added that it had $40 million in claims against Singapore-based Three Arrows Capital, a crypto hedge fund that filed for bankruptcy earlier this month, in the filing at the U.S Bankruptcy Court for Southern District of New York

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

It was during the COVID-19 pandemic, crypto lenders boomed, drawing depositors with high interest rates and easy access to loans that is rarely offered by traditional banks. Tokens are lent to mostly institutional investors, and they make a profit from the difference.

However, after a sharp crypto market sell-off spurred by the collapse of major tokens terraUSD and luna in May, lenders’ business model came under scrutiny.

Voyager Digital Ltd, another U.S. crypto lender, after suspending withdrawals and deposits, filed for bankruptcy this month. A smaller lender, Singapore’s Vauld, also froze their investors’ withdrawals this month.