Celsuis held its first hearing in bankruptcy court, publishing a presention that highlights the grim decline in value of its crypto holdings in just a few weeks.
According to a presentation, as of March 30, 2022, Celsius helld over $22 billion in assets. That amount vaporized in the following weeks losing around $17.8 billion dropping to $4.3 billion by July 14, 2022. It was mid-June when Celsius shut down all trading an withdrawals effectively freezing accounts and denying any access by account holders. As of July 14, liabilities outweighed assets by around $1.2 billion.
The outline highlights “key legal questions”:
- Are the crypto assets in Celsius’ possession property of the estate? Is the answer to this question different for crypto assets held under the Custody vs. the Earn program
- What about crypto assets transferred to Celsius to collateralize institutional and retail loans?
- What does it mean to unimpair a crypto claim or to pay a crypto claim in full?
- Are customers entitled to the return of crypto in-kind?
- The amount of a crypto claim is determined as of what date (e.g., as of the petition date, effective date, distribution date)?
- Which Celsius entities do customers have claims against?
- Do retail and institutional borrowers have a setoff right where they (a) borrowed cash, stablecoins, or other crypto from Celsius and (b) transferred crypto to Celsius?
- Can Celsius recover customer withdrawals or loan liquidations completed in the 90 days before filing as preferences?
Celsius points a finger at collapsing crypto valuations fueled by events like the implosing of TerraUSD/LUNA, the aspiring algo stablecoin that ended up not being very stable. Of course, broader markets have declined alnog with crypto, but this does not clear Celsius of its shortcomings in risk management.
Celsius states that “next steps” include “preserving value” and “consider[ing] assets sales and third-party investment opportunities” – which have not surfaced so far. The short term goals include reorganizing Celsius’ business while maximizing “returns for stakeholders.”
Via Twitter, Celsius noted that account holders may now file for claims.
Customers can now file notice of a claim with Stretto. For additional information:
— Celsius (@CelsiusNetwork) July 19, 2022
Whatever happens, it will be a long road for investors that lost their money and it is not clear what kind of chance Celsius has to resurrect its business.
The presentation is available here.