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Bankrupt Crypto Lender Celcius’ Problems Didn’t Start In 2022: A New Examiner’s Report Revealed

The 31st of January 689-page examiner’s report on Celcius, a bankrupt crypto lender, revealed that Celsius’ problems did not start in 2022. According to the report, when Celsius started using customer assets to fund rewards and operational expenses, the serious problems started dating back to at least 2020. This latest examiner’s report on Celcius is the final one for the crypto lender bankruptcy proceedings. The report revealed a detailed account of the finances and actions of Celcius that led it to insolvency.¬†

The report also revealed that Celcius, which was one of the biggest retail lenders in the industry, how became one of its top borrowers. In July 2022, after freezing customer withdrawals and swaps due to extreme market conditions, Celsius filed for Chapter 11 bankruptcy protection. At that time, the extreme market conditions and crypto market turmoil were due to the collapse of the Terra ecosystem.

But the latest examiner’s report alleged that Celsius had massive holes in its balance sheet as early as 2020, which managed to lose money during the up-only cycle of the market. According to the latest report, Celsius was never a profitable crypto lending company. In reality, in May 2021, when the company started tracking its assets and drawbacks on a coin-by-coin basis, it was already around $600 million in the red. At that time, the stablecoin liabilities of Celcius hit more than $2 billion. According to the report, Celcius was allegedly using the deposited BTC and ETH of customers as collateral to borrow stablecoins at a time when the crypto prices were very high to fund its rewards, operations, and investments.

According to the report, Jason Perman, the former vice president of treasury at Celcius, called selling client assets to cover liability on its balance sheet a cardinal sin. During 2020 and 2021, Celsius took out several loans using customer-deposited ETH and BTC. The report also alleged that Celcius lost more than $288 million on a roughly $129 million loan. And in 2022, when the overall crypto market was declining, Celsius expended ETH and BTC to repay outstanding stablecoin loans.

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