Below is an excerpt from a recent edition of Bitcoin Magazine Pro, bitcoin magazine Premium Markets Newsletter. For being one of the first to get these insights and other on-chain bitcoin market analysis straight to your inbox, Subscribe now,
Read previous Bitcoin Magazine Pro articles and updates about Celsius here:
This article will shed some light on the details of Celsius’ situation following the Chapter 11 bankruptcy protection filing tomorrow afternoon. CEO Alex Mashinsky followed up the filing with an official statement released today.
In the statement, among many other interesting notes, it was revealed that there is officially a $1.19 billion hole in the firm’s balance sheet. Unofficially, the numbers are much worse, most obviously $600 million worth of CEL tokens that the company claims as an asset.
The firm is also engaged in providing collateralized loans with customer deposits to invest in mining operations through a $750 million line of credit.
Celsius also admitted to taking client funds and directly speculating in various futures instruments. A proper bank/loan desk would ensure to match the liabilities of the customers with the assets, whereas people like Celsius were just speculating/gambling.
We haven’t even mentioned yet the 35,000 Ether that went missing due to the loss of private keys. The full filing document can be read here and the issues run deep.
The Chapter 11 bankruptcy filing comes as no surprise in this light, and the blatant negligence of Celsius and other actors in the wider bitcoin/cryptocurrency space would certainly bring about a massive amount of new regulations on centralized platforms.
The reason for our extensive coverage and documentation of the “infection” condition in particular is because of the lasting impact of the outcome. Due to the sheer scale, scope and reckless nature of mismanagement of client funds, with layers of unclear leverage, billions of dollars of investor funds have been lost and asset exchange rates have collapsed.
It is only by proper identification and the underlying change of the underlying problems that the future can be built on a more sustainable basis.
In similar news, the list of creditors of the firm was released in a recent Celsius Chapter 11 bankruptcy filing. The largest creditor, identified as Ferros USD Fund S.P., has several significant ties to industry-leading firm Alameda Research, which has been in the midst of a transition in recent weeks, as first reported by Bloomberg. was.
The more documents and filings that emerge, the more it becomes known how much the industry was/is connected between counterparties. With this in mind, we will reiterate our belief that the full effects of the recent crypto native credit crash are not known or fully felt at the present time.
Read ICYMI: Bitcoin Magazine Pro June Contagion Report.