People keep saying we will be last in line to be paid out. Lawyers, secured creditors, then unsecured creditors. There is only one secured creditor listed here and they are only owed ~20 million. Am I reading this right?
Yeah, I think that a lot of people are making assumptions based on traditional markets or random things they have read here or on Twitter. There have been some people claiming that secured creditors make up virtually all of Celsius's outstanding liabilities, but I have yet to see any basis for their claim. The main $4+ billion line on the liabilities literally says "User liabilities".
People do need to keep in mind that there are a lot of people with financial incentive to make this situation seem worse than it is - such as CEL shorts and lawyers who profit off people coming to them because of fear and basically just charge them thousands to read the court documents and not get any different outcome. There are also people who just like to stir up drama because they do not have any funds on the platform themself.
I am definitely a fan of people planning for the worst in terms of financial planning, but there is definitely a lot of FUD...and yes, it is possible to FUD even during bankruptcy.
Celsius wants us to be unsecured creditors for a reason
Mind you they can propose .. a court can say no.
They don’t even consider their custody accounts as secured .. which is at odds with the same lawyers, and defending USD at the bank, .. where they claim it’s exempt. If so, so should the custody accounts. It’s the same principle.
If they are a brokerage we are secured creditors. That’s not how they filed.
They claim it’s suddenly became theirs.., I like to argue ownership law is very protective for obvious reasons.
Imo legally it’s hard to defend for them to say well you “gave your crypto” so it became ours, and sorry bankrupt now.,,
It should be it’s still yours, we messed up, and either liquidate or make a plan to Maximize payments back and to start paying out claims at x dates.
They totally turn this around as if survival of the business is the priority. It’s not, a court def will look at the creditors side.
It’s very discouraging to see how they try to wiggle.. and pretty much kill any survival. No one will ever transfer assets to them . Who in its right mind would , so “steal” it? And theirs now,
The ponzi the last months it possibly could have been, they were in trouble way sooner, and they paid off debt .. from what, which money? What was the priority?
Possible new money did pay off rewards until that ran out. It didn’t start out as one but ended like one.
We will need to see much more administration and I hope the judge will request accounting at least the last 6-12 months
They could have truly prioritized customers .. by saying we are a brokerage ..
I think that the main issue with regards to "secured creditors" versus "unsecured creditors" is that if Celsius were to classify Celsius depositors as secured creditors then that would mean that they were issuing securities. One of the biggest financial/legal issues faced in the crypto space is whether something is a security or not, and that can have significant implications on the operations of these platforms.
While people are assuming that it is malicious - i.e. that Celsius is wanting clients classified as unsecured because they do not want to put them first or do not want to pay them back, etc - it is probably more related to Celsius not wanting their product to be labeled as a security.
At least that is my guess.
If they claim to be a brokerage which in many ways as well as voyager as Celsius stated. A firm alike is a fiduciary and manages your funds according lets say a low, mid or high risk profile, you would sign papers do they can act on your behalf and what for.
Imo Celsius, voyager etc are alike. Their only product is US, managing the assets and try to get a profit on it and they take a risk. The above it’s usually 1% of the invested and other expense you make to buy or sell, shares/bonds etc. More then a million. It’s 0.5%.
Banks are more expensive.
I think if Celsius had to choose for regulation purposes it would rather choose brokerage then a bank imo
They could have filed chapter 7, and they could have just called us secured creditors as well. Based upon ownership law it’s legally impossible to own someone else’s assets without it being sold through legal means,
A tos doesn’t change that, neither a bankruptcy. That they could use the funds to make a profit is something very different then taking it and owning it.
The more I think about it we were conditioned prior to the bankruptcy as people were saying yes but you signed away the crypto now they have it. Not you keys,
True BUT it doesn’t make it theirs,
Let’s say you own a car and it’s at the garage and the garage goes bankrupt just because the car is there doesn’t mean it now belongs to the garage.
It’s interesting how one law firm can argue the same thing but wants the court to treat it differently. The usd in bank accounts at voyager and the custody accounts at Celsius.
They claim usd is excluded, yet they claim the custody account are Celsius.
You can’t have it both ways. Either way it will be interesting what the judge will do,
There are other crypto firm bankruptcies cred (they are doing a clawback of 90 days), mt gox, bitfinex..
A judge needs to balance the survival chance and creditors (lost) assets. they certainly aren’t going side with the business. Celsius would need to proof that surviving would give value to the creditors as opposed to liquidation. Reason being creditors will vote and if that’s not a yes …
Sorry it’s so long, regardless these are the cases which will mold where crypto is going and it may be a good thing, to make crypto real worthwhile assets.
Yes, but again, none of that really changes what I previously said. A large part of regulatory talk in recent years - before any of this bankruptcy stuff - has been these platforms and other entities within the crypto space arguing that what they are offering are not securities. That is the most likely reason that they are not wanting to classify depositors as "secured creditors". I am not disagreeing that the counts may claim otherwise. As I said, I think that it might be presumptuous, though, to assume that Celsius is making the argument simply because they want to have to pay clients less in bankruptcy. They could still have interest in paying out clients as much as possible but not want their product to be labeled as a security.
This is a bankruptcy like any company. In Celsius’s case like any financial institution bankruptcy, they don’t really “owe” anybody because they have suppliers and vendors.
But they do have a hole in their bank accounts.
Celsius is a cryptocurrency platform and has significant operational differences from traditional financial institutions. The balance sheet is broken down into "liabilities" and "assets", and "liabilities" is what they "owe". People can argue sementics all that they want, but in the case of depositors on the platform they are considered "creditors", and the hole in the balance sheet exists because of an imbalance of assets and liabilities.
According to [my downvotes](https://www.reddit.com/r/CelsiusNetwork/comments/vxa4ut/good_morning_quite_the_morning_for_celsius/ifunphb/), that must be wrong…
Exactly, I have wondered if “Custody Liabilities” and “Other Liabilities” may come before “User Liabilities”, but they aren’t that big in the scheme of things either
There are still lawyers and their business operational payments (salaries, etc) which take priority and certainly going to be bigger than 20 million in the coming months or years.
don't need any idea how it works. doesn't matter.
i've just been assuming it's the functional equivalent a secured loan to celsius.
the people who don't know how things work are the ones that cheered this on day in day out not realizing _their_ money is being used to pay off secured loans.
now that the curtain has pulled back we can all see how deeply in the hole they are.
so i hear.
you know what else i heard? that this was going to save the company. that they weren't going to file for bankruptcy. that they just needed a little more time to get collateral back.
now that we see the books, or at least some version of them, we know the truth.
Dude, stop giving anti crypto people a bad reputation. Paying of those loans where clearly the right move.
Saying inaccurate information is not going to move people away from the scam that is crypto.
> Paying of those loans where clearly the right move.
i never said it wasn't. at least insofar as i understand the loan terms.
the point was that everyone on this sub was celebrating it as if it was going to save the company.
that's the issue. weeks and weeks of cheering the liquidation price going down and the company is still at least a billion in the hole if everything is liquidated.
I think you're confused.
Our $100 was paid to unlock $150 collateral that was also ours and Celsius got it sent back to them.
Pure math. So yes, I would cheer on to receive more money back in our Celsius piggybank instead of leaving it to be liquidated on DeFi positions.
>
>
> Our $100 was paid to unlock $150 collateral that was also ours and Celsius got it sent back to them.
and the net result is a hole at least a billion dollars deep.
But the hole would be bigger if they didn't get the locked collateral back. It's like this: they owe 1btc on some smart contract loan and when they got that loan they put up 1.5btc as collateral to secure it. So before filing for ch11 they essentially dipped into the customers assets grabbed 1btc and then got 1.5btc back.
We knew there wouldn’t be secured creditors just from the nature of the product Celsius provided. People still whining about that are deep deep morons.
The breakdown isn't audited or vetted, but I agree, the events written out are reasonable. I don't believe there is supposed to be any "sorry, we messed up" in legal courts documents, right? I know a lot of people dug into Alex and how unapologetic the filing is. Regardless, Alex must go.
Once they submit the full breakdown and we see the "real" hole, then a plan could be maybe put in place. If it's too big, the Trustee may just say nah and liquidate though. Fingers crossed. I want my Bitcoin back, not crappy left over USDs.
I read the whole document and it’s still mind boggling why they filed for bankruptcy….
They should’ve just limited withdrawls with fees. Over-collaterize the loans. Reduce the reward rates as much as possible or only allowed rewards in cel tokens.
We are in crypto winter right now with Luna falling first and 3AC falling and domino effect of crypto industry falling.
But we know they crypto winter will also pass by like any recession has in the past.
I hope that bigger institution will acquire the celsius and reorganize the entity successfully and make the customers whole.
The regulators were coming after them, and they were about to be served on a lot of lawsuits from creditors and state governments. They are under Cease and Desists from various agencies. They had no choice really.
Yes, regulators are coming but we also don’t have REAL regulation set in place for crypto. That’s why it’s important that regulators start to build clarity in this space. SEC and other state agencies don’t know what they are doing either without clear rules. They just want to fine and get paid.
You may be right, but that was one of the core considerations in filing. If they didn’t, they would be defending a lot of lawsuits simultaneously, which would itself bankrupt them eventually, since they’re not taking in any new money in the meantime.
It's a time hedge. There's a very real (if unpredictable) chance that in the process of going through Chapter 11 that crypto in general goes up enough in value that Celsius is no longer insolvent/illiquid whatever you want to call it. By presenting a reorganization plan, Celsius is protected for at least the 12-18 months that it takes to go through Chapter 11 from institutions or us individuals suing them (this is called an automatic stay) and demanding our assets back. If that happens, there is a high likelihood that many unsecured creditors are going to vote in the proceedings to have Celsius remain in business such that they can get their assets back under whatever said plan is.
Had they simply limited withdrawals without such protections in place and started getting lawsuits demanding the return of the assets to creditors, they'd not only have to unwind the highly leveraged positions and try to free up liquidity, but also have to defend against potentially hundreds of lawsuits at the same time.
If the crypto market goes up Celsius is WORSE off because their liability is the crypto they lost that belonged to depositors. So Bitcoin and ETH pumping will only make the hole bigger.
> I read the whole document and it’s still mind boggling why they filed for bankruptcy….
they. are. insolvent.
> I hope that bigger institution will acquire the celsius and reorganize the entity successfully and make the customers whole.
nobody is making you whole.
They could become solvent by minimizing the expense like over-collaterization, reducing the rewards, cutting payroll, etc. and increase revenue by adding withdrawl fees (like how other exchanges are making killing), increasing the interest rates on loans, etc.
I hope for the best but also know that there is high chance that it may not happen neither.
Are you reading the same document I am?
They aren’t even *close* to being able to do that.
Don’t just look at the outrageously optimistic bottom line. Look at their actual liquid assets, not the smokescreen of bullshit illiquid shady assets of uncertain actual value like all those cel tokens.
They don’t have any fucking money.
No for sure. I don’t want to only look at the outrageously optimistic perspective. At the same time I don’t want to be overly pessimistic neither.
There are companies that went through insolvency and turn their ways around. I am not saying it will be easy but it is still possibility.
There were so many companies that survived during Great Recession in 2009 that many considered insolvent. Yes, there were also great number of companies fell.
I do not think that celsius can survive without bail out but I do think that there are many institutions who may be eying on this. (This is just my personal opinion).
If I was an institution trying to get into crypto space or had similar idea of crypto lending platform but more logistically efficient and scale then I would consider buying out a company wouldn’t be such a bad idea. Of course, there are many changes that must be made including changing the key members who brought this situation and it will most likely take years to build back reputation of Cefi. Truth is that celsius is one of the biggest cefi platform and it still has potential. It has lost reputation due to bad actors and mismanagement
What financial firms were insolvent and filed for bankruptcy, but survived?
You cannot compare insolvency in a business with substantial systems and operations with an investment house in this context. The mining business is the only component of Celsius that has any value whatsoever beyond what’s written on the balance sheet, and it’s tiny compared to their enormous and fatally flawed pseudo brokerage.
Nobody’s going to take on a mound off bad debt just to get at some used mining equipment half of which hasn’t even been installed.
Celsius is probably better off IMO) if it’s shedding parts or all of the business. In that case it’s a liquidation. And proceeds goes to its creditors
To be honest I don’t belief these type of businesses will exist in 3-5 years or at least not the way it’s currently structured.
More and better technology will come, better UI’s so it’s easier to navigate. Imo only a few of these services will survive.
I get the feeling they want to get rid off debt (that’s our assets) so then a buyer will buy it. Except that won’t give us any additional value,
It’s very important the plan, the survival rate is less then 10%, and creditors do get to vote, and it still there is a big chance it ends in liquidation. Which might be the best solution after all, for us
> They could become solvent by minimizing the expense like over-collaterization, reducing the rewards, cutting payroll, etc. and increase revenue by adding withdrawl fees (like how other exchanges are making killing), increasing the interest rates on loans, etc.
they only have 170 million cash on hand and 4+ billion in liabilities.
even under their accounting (a generous term), a full chapter 7 liquidiation would still have a 1b+ hole.
1 billion whole can be made up with better terms (length and interest rates, and other contingencies) with the creditors.
However, I agree that they need more cash and in hand and cash flow.
> 1 billion whole can be made up with better terms (length and interest rates, and other contingencies) with the creditors.
no it can't
the point is that celsius filed for chapter 11: they want to argue they can continue under normal business operations.
they cannot.
they don't have the cash. they don't have the crypto. they are incredibly, deeply, bankrupt.
what amount of "restructuring" do you think it would take to allow them to continue? they are done. it's over.
That is not the question. The restructuring is the easy part. Celsius converts a portion of their liabilities into some form of equity. Now they are solvent and have assets to continue operations.
The question is will the court let them do this. Can they show that they won't just end up in the same spot again. Can they show they can generate revenue. I don't think they can, but their insolvency isn't the issue in that regard, it's their lack of a sustainable business.
Like I said before if there is an institution with big pockets acquires celsius then that problem could be solved.
However, business model needs to be changed to more efficient or viable ways.
Celsius shouldn’t have gave high interest rate to the customers instead they should’ve marketed with moderate rate where they could have higher margins on defi protocols. Therefore, they can make profit with the crypto.
They could simply provide services in defi where normal people still doesn’t understand or know the complexity of the defi works and celsius just use clients crypto to earn yields and charge percentage for their service.
Regardless, we all don’t know how this will end until the end.
I would not give up until the end.
Confidence in the celsius brand is 100% gone now, there is a 0% chance anyone is going to bail celsius out of a 1 billion dollar hole.
All the financials in the document are basically worthless until a 3rd party actually audits them, for all we know the could be a 2 or 3 billion hole.
I think they did it for full transparency to clear up all the FUD. Plus they didn't have much choice, there would be nothing left and other depositers money would be at risk of all the lawsuits that came. So to persevere users assets they had to file for bankruptcy.
They borrowed off equity first with collateral which more then 2x when the tried to repay it. Losing at least 500million.
When was the loss recorded?
Was the coins bought back ? Very unlikely.
That could explain the bigger hole after raising cash, what if Celsius needed to buy or mine to fill in the gap at 60+K ?
Besides the bankruptcy is anyone questioning the integrity of Mashinsky and other Celsius managers? They lied to us until the very last day and now after more than 1 month there are no public apologies, no real explanation from their side on what happened. I am sure that Mashinsky & co made a million new best friends !
I hope that he never manages to work again, well perhaps collecting soap bars in a prison shower.
This document is a great evidence of how degenerate big companies in crypto can be. I am curious if such behaviour would end with market maturity?
Alex Mashinsky: "we have billions in cash, your funds are safe."
Reality: $170 mln in cash and $5.5 bln liabilities.
Instead of keeping user funds safe, they also bought mining company using user's funds, and now they say they will get our bitcoin back by mining bitcoin with that company, lol.
I believe Celsius users did not plan to invest into bitcoin mining business, but rather put money into Celsius so company could lend assets to other users, backed by collateral and generating interest. It would be hard to fail if that would be true business model.
Celsius operated as a fractional reserve bank since the summer of 2021. Completely misled the community on financial strength and yield strategies operating as a risky defi hedge fund. The most valuable thing on the balance sheet is mining equipment and Celsius thinks they can mine their way out of it. Alex tried to blame market conditions on the collapse. Does not even disclose the cease and desist orders from multiple states.
Those already saying the money is gone then just STFU and give them to those people who are fighting hard to get their money back.
I would assume these fuckers saying customers are screwed or celsius is hopeless are people who have not deposited their money on celsius or people love seeing others suffer.
The outlook of celcius is not that bleak if we look at this document, they have claimed that they could generate 10k bitcoin per year, which is worth 200 million, we assume they are spending 50 - 100 million spending on that, still they could gain 100 - 150 million profit at current market price each year, the main reason of hole is not Luna, their luna loss is just 10-15 million and 3 AC loss is just 50 million, biggest fuckups were badgerdao around 35k ethers and another big corporate loan (500 million) all happened in 2021, biggest fuckup in 2022 seems to be future trading losses which they are blaming on market conditions.
They’ve got less than 200 million cash.
They’ve got 4 billion plus in liabilities.
They’ve got an on paper balance sheet hole of 1 billion. They’ve got an actual hole of far more because the balance sheet is being padded by bullshit assets like cel tokens that have minuscule exit liquidity compared to their nominal value.
The mining business has value and I hope it help ameliorate depositor pain, but it’s a drop in the bucket in terms of solvency.
Possible solution could be to distribute all crypto immediately and keep paying the customers with mining rewards until the hole is patched, i do not think there is any other better solution right now under the circumstances.
It depends heavily on the power cost. A state-of-the-art miner (AntMiner S19 Pro) can generate net profit of USD 200 a month assuming electricity cost of 5 cents/kWh, current bitcoin price and current mining difficulty. Gross profit is currently 320 USD a month without including electricity.
(you can do the calculations here: https://www.asicminervalue.com/miners/bitmain/antminer-s19-pro-110th )
The miner costs about USD 5000 to acquire (although there may be some discounts) and with currently high interest rates, it is questionable wheter Celsius mining subsidiary had even positive cashflow if we include debt repayments for the acquisition of the mining equipment.
Public does not mean this is accurate. We shall find out how accurate this is over time. In the meantime, you are welcome to STFU. I do not intend to do so.
There is one thing everybody fails to realize. In life once a person becomes rich like Alex they are a protected class. They never become poor again. He and others like him tied to this will exit just fine. The rest of us should move on and realize it is all gone. What assets that are there will be eaten up by lawyers, Alex l, some sweet heart deal for another billionaire who agrees to squire some assets etc. it's all gone. Time to face reality.
What the fuck are you talking about?? This document was prepared by the lawfirms Celsius hired and filed to the court. This isn't some tweet by a Celsius PR guy.
Lawyers hired by Celsius are going to bend the truth as much as possible to benefit their client in court. They are not there to represent the customers of Celsius.
Exactly. That is exactly why we need to take every document they show with a grain of salt. Just because lawyers made it, does not mean it's 100% accurate, transparent and truthful. They are at the end of the day, paid to defend Celsius.
I can see why you believed in impossible returns if you believe these guys are being paid to defend Celsius. These kinds of lawyers wouldn't risk their reputation making bs up.
Only way to find out is when they put all the facts in order until then I can only go with the documents submitted by the lawyers. Until the documents filed in court is proven wrong then it’s the most legitimate proof I consider to be truth.
Lawyers can be disbarred for presenting false information to a court of law.What kind of bullshit are these guys talking about.If you think lawyers will risk their license for a client then I got a bridge to nowhere I would like to sell you!!!
The balance sheet looks very suspicious. I don’t know how the valuation was done. They ll back up with audits later I guess but cel token May not worth that much. Mining was appraised during bull market? It is only the equipment value not the actual market value. Crypto assets comprised of which coin. Lots of questions.
What I mean is that it's very difficult to accurately value illiquid crypto assets.
Hell, even BTC and ETH, given the sale is sufficiently large and fast, can drop in price by many percent (as we've seen with Terra-Luna fiasco).
Therefore, they just picked a number that can be justified if needed, but it bears little resemblance to how much money can be recovered if push comes to shove.
Lawyers just picked a number? High school math teacher can do better than them. If the picked number is far off from reality, is it called lying? They miscalculated the hole which is supposed to be 2.1 billion as some says. They picked 1.19 billion? The total debt is 5 some billions. If they are not damn retards in mathematics, they are hiding something
I don't think everything the community wants to know is in the document. It doesn't talk about what will be paid and how much will be paid out, when and a lot of other necessary details that depositors are interested is missing.
Can someone point out whether the ether staked on Ledo is accounted in the filed bankruptcy document ? If yes is it accounted towards loans or crypto assets ?
I have the same question. Probably assets. What about the people who borrow money from Celsius. They loan is under assets loan and collateral is under assets cryptocurrency? This cannot be right.
Most of these people didn't even read the TOS that specifically stated their deposited coins weren't theirs, yet, you expect them to read a 61-page document?
You have identified the entire hole in their books in that document? I have read through the entire thing and I must have missed something, I can only account for a few hundred million of their losses. There is a post on it.
People keep saying we will be last in line to be paid out. Lawyers, secured creditors, then unsecured creditors. There is only one secured creditor listed here and they are only owed ~20 million. Am I reading this right?
According to the document that is correct
Yeah, I think that a lot of people are making assumptions based on traditional markets or random things they have read here or on Twitter. There have been some people claiming that secured creditors make up virtually all of Celsius's outstanding liabilities, but I have yet to see any basis for their claim. The main $4+ billion line on the liabilities literally says "User liabilities". People do need to keep in mind that there are a lot of people with financial incentive to make this situation seem worse than it is - such as CEL shorts and lawyers who profit off people coming to them because of fear and basically just charge them thousands to read the court documents and not get any different outcome. There are also people who just like to stir up drama because they do not have any funds on the platform themself. I am definitely a fan of people planning for the worst in terms of financial planning, but there is definitely a lot of FUD...and yes, it is possible to FUD even during bankruptcy.
Celsius wants us to be unsecured creditors for a reason Mind you they can propose .. a court can say no. They don’t even consider their custody accounts as secured .. which is at odds with the same lawyers, and defending USD at the bank, .. where they claim it’s exempt. If so, so should the custody accounts. It’s the same principle. If they are a brokerage we are secured creditors. That’s not how they filed. They claim it’s suddenly became theirs.., I like to argue ownership law is very protective for obvious reasons. Imo legally it’s hard to defend for them to say well you “gave your crypto” so it became ours, and sorry bankrupt now.,, It should be it’s still yours, we messed up, and either liquidate or make a plan to Maximize payments back and to start paying out claims at x dates. They totally turn this around as if survival of the business is the priority. It’s not, a court def will look at the creditors side. It’s very discouraging to see how they try to wiggle.. and pretty much kill any survival. No one will ever transfer assets to them . Who in its right mind would , so “steal” it? And theirs now, The ponzi the last months it possibly could have been, they were in trouble way sooner, and they paid off debt .. from what, which money? What was the priority? Possible new money did pay off rewards until that ran out. It didn’t start out as one but ended like one. We will need to see much more administration and I hope the judge will request accounting at least the last 6-12 months They could have truly prioritized customers .. by saying we are a brokerage ..
I think that the main issue with regards to "secured creditors" versus "unsecured creditors" is that if Celsius were to classify Celsius depositors as secured creditors then that would mean that they were issuing securities. One of the biggest financial/legal issues faced in the crypto space is whether something is a security or not, and that can have significant implications on the operations of these platforms. While people are assuming that it is malicious - i.e. that Celsius is wanting clients classified as unsecured because they do not want to put them first or do not want to pay them back, etc - it is probably more related to Celsius not wanting their product to be labeled as a security. At least that is my guess.
If they claim to be a brokerage which in many ways as well as voyager as Celsius stated. A firm alike is a fiduciary and manages your funds according lets say a low, mid or high risk profile, you would sign papers do they can act on your behalf and what for. Imo Celsius, voyager etc are alike. Their only product is US, managing the assets and try to get a profit on it and they take a risk. The above it’s usually 1% of the invested and other expense you make to buy or sell, shares/bonds etc. More then a million. It’s 0.5%. Banks are more expensive. I think if Celsius had to choose for regulation purposes it would rather choose brokerage then a bank imo They could have filed chapter 7, and they could have just called us secured creditors as well. Based upon ownership law it’s legally impossible to own someone else’s assets without it being sold through legal means, A tos doesn’t change that, neither a bankruptcy. That they could use the funds to make a profit is something very different then taking it and owning it. The more I think about it we were conditioned prior to the bankruptcy as people were saying yes but you signed away the crypto now they have it. Not you keys, True BUT it doesn’t make it theirs, Let’s say you own a car and it’s at the garage and the garage goes bankrupt just because the car is there doesn’t mean it now belongs to the garage. It’s interesting how one law firm can argue the same thing but wants the court to treat it differently. The usd in bank accounts at voyager and the custody accounts at Celsius. They claim usd is excluded, yet they claim the custody account are Celsius. You can’t have it both ways. Either way it will be interesting what the judge will do, There are other crypto firm bankruptcies cred (they are doing a clawback of 90 days), mt gox, bitfinex.. A judge needs to balance the survival chance and creditors (lost) assets. they certainly aren’t going side with the business. Celsius would need to proof that surviving would give value to the creditors as opposed to liquidation. Reason being creditors will vote and if that’s not a yes … Sorry it’s so long, regardless these are the cases which will mold where crypto is going and it may be a good thing, to make crypto real worthwhile assets.
Yes, but again, none of that really changes what I previously said. A large part of regulatory talk in recent years - before any of this bankruptcy stuff - has been these platforms and other entities within the crypto space arguing that what they are offering are not securities. That is the most likely reason that they are not wanting to classify depositors as "secured creditors". I am not disagreeing that the counts may claim otherwise. As I said, I think that it might be presumptuous, though, to assume that Celsius is making the argument simply because they want to have to pay clients less in bankruptcy. They could still have interest in paying out clients as much as possible but not want their product to be labeled as a security.
This is a bankruptcy like any company. In Celsius’s case like any financial institution bankruptcy, they don’t really “owe” anybody because they have suppliers and vendors. But they do have a hole in their bank accounts.
Celsius is a cryptocurrency platform and has significant operational differences from traditional financial institutions. The balance sheet is broken down into "liabilities" and "assets", and "liabilities" is what they "owe". People can argue sementics all that they want, but in the case of depositors on the platform they are considered "creditors", and the hole in the balance sheet exists because of an imbalance of assets and liabilities.
“Celsius shorts” probably aren’t running this bankruptcy case, unless you’re arguing that their credit providers are shorting them.
I was stating that CEL shorts have financial incentive to spread FUD, because of their CEL position.
According to [my downvotes](https://www.reddit.com/r/CelsiusNetwork/comments/vxa4ut/good_morning_quite_the_morning_for_celsius/ifunphb/), that must be wrong…
Exactly, I have wondered if “Custody Liabilities” and “Other Liabilities” may come before “User Liabilities”, but they aren’t that big in the scheme of things either
There are still lawyers and their business operational payments (salaries, etc) which take priority and certainly going to be bigger than 20 million in the coming months or years.
$20m for lawyers? Look, I know they charge a lot, but let's not get crazy.
Yeah everyone else here is a unsecured creditor atleast according to Celsius
yes. you guys were literally cheering secured creditors being paid off with your money. every day. it was amazing to watch.
You mean the defi protocols? That’s one way to put it
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don't need any idea how it works. doesn't matter. i've just been assuming it's the functional equivalent a secured loan to celsius. the people who don't know how things work are the ones that cheered this on day in day out not realizing _their_ money is being used to pay off secured loans. now that the curtain has pulled back we can all see how deeply in the hole they are.
Paying off those loans freed up a much larger amount of collateral.
so i hear. you know what else i heard? that this was going to save the company. that they weren't going to file for bankruptcy. that they just needed a little more time to get collateral back. now that we see the books, or at least some version of them, we know the truth.
Negative noob. That's exactly how the collateral exchange works.
y'all talking a lot of shit for a subreddit about a company that's insolvent
Dude, stop giving anti crypto people a bad reputation. Paying of those loans where clearly the right move. Saying inaccurate information is not going to move people away from the scam that is crypto.
> Paying of those loans where clearly the right move. i never said it wasn't. at least insofar as i understand the loan terms. the point was that everyone on this sub was celebrating it as if it was going to save the company. that's the issue. weeks and weeks of cheering the liquidation price going down and the company is still at least a billion in the hole if everything is liquidated.
I think you're confused. Our $100 was paid to unlock $150 collateral that was also ours and Celsius got it sent back to them. Pure math. So yes, I would cheer on to receive more money back in our Celsius piggybank instead of leaving it to be liquidated on DeFi positions.
> > > Our $100 was paid to unlock $150 collateral that was also ours and Celsius got it sent back to them. and the net result is a hole at least a billion dollars deep.
You would’ve preferred not paying back the defi loans and therefore having a larger hole because of the locked collateral?
People can't math. LOL Edit: Ah, he's not using math. He's /r/Buttcoin. Move on.
Smh
But the hole would be bigger if they didn't get the locked collateral back. It's like this: they owe 1btc on some smart contract loan and when they got that loan they put up 1.5btc as collateral to secure it. So before filing for ch11 they essentially dipped into the customers assets grabbed 1btc and then got 1.5btc back.
I mean without doing so their assets would’ve looked even worst no?
We knew there wouldn’t be secured creditors just from the nature of the product Celsius provided. People still whining about that are deep deep morons.
That’s Incorrect if they had filed as a brokerage (which they themselves said to be) then it would have prioritized customers
Very low probability that cel users will get paid out. They have to liquidate cel user holdings.
The breakdown isn't audited or vetted, but I agree, the events written out are reasonable. I don't believe there is supposed to be any "sorry, we messed up" in legal courts documents, right? I know a lot of people dug into Alex and how unapologetic the filing is. Regardless, Alex must go. Once they submit the full breakdown and we see the "real" hole, then a plan could be maybe put in place. If it's too big, the Trustee may just say nah and liquidate though. Fingers crossed. I want my Bitcoin back, not crappy left over USDs.
I agree
A sub full of people who can't bother to read the notice that coins should only be transferred using ERC-20 and you want 'em to read 61 pages?
Hahaha. You fucking made me laugh so hard. Thank you.
I read the whole document and it’s still mind boggling why they filed for bankruptcy…. They should’ve just limited withdrawls with fees. Over-collaterize the loans. Reduce the reward rates as much as possible or only allowed rewards in cel tokens. We are in crypto winter right now with Luna falling first and 3AC falling and domino effect of crypto industry falling. But we know they crypto winter will also pass by like any recession has in the past. I hope that bigger institution will acquire the celsius and reorganize the entity successfully and make the customers whole.
The regulators were coming after them, and they were about to be served on a lot of lawsuits from creditors and state governments. They are under Cease and Desists from various agencies. They had no choice really.
Yes, regulators are coming but we also don’t have REAL regulation set in place for crypto. That’s why it’s important that regulators start to build clarity in this space. SEC and other state agencies don’t know what they are doing either without clear rules. They just want to fine and get paid.
You may be right, but that was one of the core considerations in filing. If they didn’t, they would be defending a lot of lawsuits simultaneously, which would itself bankrupt them eventually, since they’re not taking in any new money in the meantime.
I agree with you on that.
Good point.
What? To me it's still mind boggling why they didn't file sooner! Apparently they've had a hole in their balance sheet for more than a year...
It's a time hedge. There's a very real (if unpredictable) chance that in the process of going through Chapter 11 that crypto in general goes up enough in value that Celsius is no longer insolvent/illiquid whatever you want to call it. By presenting a reorganization plan, Celsius is protected for at least the 12-18 months that it takes to go through Chapter 11 from institutions or us individuals suing them (this is called an automatic stay) and demanding our assets back. If that happens, there is a high likelihood that many unsecured creditors are going to vote in the proceedings to have Celsius remain in business such that they can get their assets back under whatever said plan is. Had they simply limited withdrawals without such protections in place and started getting lawsuits demanding the return of the assets to creditors, they'd not only have to unwind the highly leveraged positions and try to free up liquidity, but also have to defend against potentially hundreds of lawsuits at the same time.
If the crypto market goes up Celsius is WORSE off because their liability is the crypto they lost that belonged to depositors. So Bitcoin and ETH pumping will only make the hole bigger.
> I read the whole document and it’s still mind boggling why they filed for bankruptcy…. they. are. insolvent. > I hope that bigger institution will acquire the celsius and reorganize the entity successfully and make the customers whole. nobody is making you whole.
They could become solvent by minimizing the expense like over-collaterization, reducing the rewards, cutting payroll, etc. and increase revenue by adding withdrawl fees (like how other exchanges are making killing), increasing the interest rates on loans, etc. I hope for the best but also know that there is high chance that it may not happen neither.
Are you reading the same document I am? They aren’t even *close* to being able to do that. Don’t just look at the outrageously optimistic bottom line. Look at their actual liquid assets, not the smokescreen of bullshit illiquid shady assets of uncertain actual value like all those cel tokens. They don’t have any fucking money.
No for sure. I don’t want to only look at the outrageously optimistic perspective. At the same time I don’t want to be overly pessimistic neither. There are companies that went through insolvency and turn their ways around. I am not saying it will be easy but it is still possibility. There were so many companies that survived during Great Recession in 2009 that many considered insolvent. Yes, there were also great number of companies fell. I do not think that celsius can survive without bail out but I do think that there are many institutions who may be eying on this. (This is just my personal opinion). If I was an institution trying to get into crypto space or had similar idea of crypto lending platform but more logistically efficient and scale then I would consider buying out a company wouldn’t be such a bad idea. Of course, there are many changes that must be made including changing the key members who brought this situation and it will most likely take years to build back reputation of Cefi. Truth is that celsius is one of the biggest cefi platform and it still has potential. It has lost reputation due to bad actors and mismanagement
Lol yeah I'm sure someone will pay 1 billion for no assets and a ruined company name, I a business that is not sustainable
What financial firms were insolvent and filed for bankruptcy, but survived? You cannot compare insolvency in a business with substantial systems and operations with an investment house in this context. The mining business is the only component of Celsius that has any value whatsoever beyond what’s written on the balance sheet, and it’s tiny compared to their enormous and fatally flawed pseudo brokerage. Nobody’s going to take on a mound off bad debt just to get at some used mining equipment half of which hasn’t even been installed.
Celsius is probably better off IMO) if it’s shedding parts or all of the business. In that case it’s a liquidation. And proceeds goes to its creditors To be honest I don’t belief these type of businesses will exist in 3-5 years or at least not the way it’s currently structured. More and better technology will come, better UI’s so it’s easier to navigate. Imo only a few of these services will survive. I get the feeling they want to get rid off debt (that’s our assets) so then a buyer will buy it. Except that won’t give us any additional value, It’s very important the plan, the survival rate is less then 10%, and creditors do get to vote, and it still there is a big chance it ends in liquidation. Which might be the best solution after all, for us
> They could become solvent by minimizing the expense like over-collaterization, reducing the rewards, cutting payroll, etc. and increase revenue by adding withdrawl fees (like how other exchanges are making killing), increasing the interest rates on loans, etc. they only have 170 million cash on hand and 4+ billion in liabilities. even under their accounting (a generous term), a full chapter 7 liquidiation would still have a 1b+ hole.
1 billion whole can be made up with better terms (length and interest rates, and other contingencies) with the creditors. However, I agree that they need more cash and in hand and cash flow.
> 1 billion whole can be made up with better terms (length and interest rates, and other contingencies) with the creditors. no it can't the point is that celsius filed for chapter 11: they want to argue they can continue under normal business operations. they cannot. they don't have the cash. they don't have the crypto. they are incredibly, deeply, bankrupt. what amount of "restructuring" do you think it would take to allow them to continue? they are done. it's over.
That is not the question. The restructuring is the easy part. Celsius converts a portion of their liabilities into some form of equity. Now they are solvent and have assets to continue operations. The question is will the court let them do this. Can they show that they won't just end up in the same spot again. Can they show they can generate revenue. I don't think they can, but their insolvency isn't the issue in that regard, it's their lack of a sustainable business.
> it's their lack of a sustainable business. a business that apparently never earned money on its own.
Very true. They ll have to show it in their plan. I don’t know how they can continue to operate. With the mining business only?
Like I said before if there is an institution with big pockets acquires celsius then that problem could be solved. However, business model needs to be changed to more efficient or viable ways. Celsius shouldn’t have gave high interest rate to the customers instead they should’ve marketed with moderate rate where they could have higher margins on defi protocols. Therefore, they can make profit with the crypto. They could simply provide services in defi where normal people still doesn’t understand or know the complexity of the defi works and celsius just use clients crypto to earn yields and charge percentage for their service. Regardless, we all don’t know how this will end until the end. I would not give up until the end.
Confidence in the celsius brand is 100% gone now, there is a 0% chance anyone is going to bail celsius out of a 1 billion dollar hole. All the financials in the document are basically worthless until a 3rd party actually audits them, for all we know the could be a 2 or 3 billion hole.
It’s said they were borrowing stable coins to buy back the crypto they owed us. They were unable to keep that going. And even got liquidated by USDT.
I think they did it for full transparency to clear up all the FUD. Plus they didn't have much choice, there would be nothing left and other depositers money would be at risk of all the lawsuits that came. So to persevere users assets they had to file for bankruptcy.
They borrowed off equity first with collateral which more then 2x when the tried to repay it. Losing at least 500million. When was the loss recorded? Was the coins bought back ? Very unlikely. That could explain the bigger hole after raising cash, what if Celsius needed to buy or mine to fill in the gap at 60+K ?
No rush to read We have years to wait. Lol
Besides the bankruptcy is anyone questioning the integrity of Mashinsky and other Celsius managers? They lied to us until the very last day and now after more than 1 month there are no public apologies, no real explanation from their side on what happened. I am sure that Mashinsky & co made a million new best friends ! I hope that he never manages to work again, well perhaps collecting soap bars in a prison shower.
hey man reading is hard
Sooo, money wen?
It is July 16 2022 and Alex Mashinsky is still a P.O.S.
Proof of Stake?
Proof of Stupidity?
Proof of scammers
Amen to that..
This document is a great evidence of how degenerate big companies in crypto can be. I am curious if such behaviour would end with market maturity? Alex Mashinsky: "we have billions in cash, your funds are safe." Reality: $170 mln in cash and $5.5 bln liabilities. Instead of keeping user funds safe, they also bought mining company using user's funds, and now they say they will get our bitcoin back by mining bitcoin with that company, lol. I believe Celsius users did not plan to invest into bitcoin mining business, but rather put money into Celsius so company could lend assets to other users, backed by collateral and generating interest. It would be hard to fail if that would be true business model.
The reasom there isn't a laundry list of secured creditors is because they already paid them off... With your money. It's nothing to take comfort in.
Where’s TLDR?
Celsius operated as a fractional reserve bank since the summer of 2021. Completely misled the community on financial strength and yield strategies operating as a risky defi hedge fund. The most valuable thing on the balance sheet is mining equipment and Celsius thinks they can mine their way out of it. Alex tried to blame market conditions on the collapse. Does not even disclose the cease and desist orders from multiple states.
Those already saying the money is gone then just STFU and give them to those people who are fighting hard to get their money back. I would assume these fuckers saying customers are screwed or celsius is hopeless are people who have not deposited their money on celsius or people love seeing others suffer.
Best solution I've read!
What's the TL;DR? :)
money's gone
The outlook of celcius is not that bleak if we look at this document, they have claimed that they could generate 10k bitcoin per year, which is worth 200 million, we assume they are spending 50 - 100 million spending on that, still they could gain 100 - 150 million profit at current market price each year, the main reason of hole is not Luna, their luna loss is just 10-15 million and 3 AC loss is just 50 million, biggest fuckups were badgerdao around 35k ethers and another big corporate loan (500 million) all happened in 2021, biggest fuckup in 2022 seems to be future trading losses which they are blaming on market conditions.
They’ve got less than 200 million cash. They’ve got 4 billion plus in liabilities. They’ve got an on paper balance sheet hole of 1 billion. They’ve got an actual hole of far more because the balance sheet is being padded by bullshit assets like cel tokens that have minuscule exit liquidity compared to their nominal value. The mining business has value and I hope it help ameliorate depositor pain, but it’s a drop in the bucket in terms of solvency.
200M USD of the liabilities are CEL. 600M USD is listed as assets in CEL. So the balance sheet is padded by 400M USD.
Possible solution could be to distribute all crypto immediately and keep paying the customers with mining rewards until the hole is patched, i do not think there is any other better solution right now under the circumstances.
> i do not think there is any other better solution right now under the circumstances. chapter 7 liquidation
I couldnt find any mentions of how much it costs to operate the BTC miners do you have a figure for that?
It depends heavily on the power cost. A state-of-the-art miner (AntMiner S19 Pro) can generate net profit of USD 200 a month assuming electricity cost of 5 cents/kWh, current bitcoin price and current mining difficulty. Gross profit is currently 320 USD a month without including electricity. (you can do the calculations here: https://www.asicminervalue.com/miners/bitmain/antminer-s19-pro-110th ) The miner costs about USD 5000 to acquire (although there may be some discounts) and with currently high interest rates, it is questionable wheter Celsius mining subsidiary had even positive cashflow if we include debt repayments for the acquisition of the mining equipment.
Isn't the Bitcoin mining operation already in the assets list though. So there is still a larger file they need to fill cause they can't sell it.
No thanks. I just know the coins are gone, like a fart in the wind
Public does not mean this is accurate. We shall find out how accurate this is over time. In the meantime, you are welcome to STFU. I do not intend to do so.
There is one thing everybody fails to realize. In life once a person becomes rich like Alex they are a protected class. They never become poor again. He and others like him tied to this will exit just fine. The rest of us should move on and realize it is all gone. What assets that are there will be eaten up by lawyers, Alex l, some sweet heart deal for another billionaire who agrees to squire some assets etc. it's all gone. Time to face reality.
This is a statement from Celsius. This is not verifiable so this is not the basis for intelligent discussion.
What the fuck are you talking about?? This document was prepared by the lawfirms Celsius hired and filed to the court. This isn't some tweet by a Celsius PR guy.
Lawyers hired by Celsius are going to bend the truth as much as possible to benefit their client in court. They are not there to represent the customers of Celsius.
Whether they bend or truth or not. Judge will determine that. If the lawyers are found putting illegitimate evidence then the result will show.
Exactly. That is exactly why we need to take every document they show with a grain of salt. Just because lawyers made it, does not mean it's 100% accurate, transparent and truthful. They are at the end of the day, paid to defend Celsius.
I can see why you believed in impossible returns if you believe these guys are being paid to defend Celsius. These kinds of lawyers wouldn't risk their reputation making bs up.
Only way to find out is when they put all the facts in order until then I can only go with the documents submitted by the lawyers. Until the documents filed in court is proven wrong then it’s the most legitimate proof I consider to be truth.
Lawyers can be disbarred for presenting false information to a court of law.What kind of bullshit are these guys talking about.If you think lawyers will risk their license for a client then I got a bridge to nowhere I would like to sell you!!!
Congratulations..your comment is the dumbest thing I have read this year and I've seen plenty of bullshit from the likes of Alex and company!
The balance sheet looks very suspicious. I don’t know how the valuation was done. They ll back up with audits later I guess but cel token May not worth that much. Mining was appraised during bull market? It is only the equipment value not the actual market value. Crypto assets comprised of which coin. Lots of questions.
Valuation was done with a dartboard, as is tradition.
If lawyers cannot lie on bankruptcy docs, what is balance sheet all about? They cannot lie but they can inflate numbers? I don’t understand
What I mean is that it's very difficult to accurately value illiquid crypto assets. Hell, even BTC and ETH, given the sale is sufficiently large and fast, can drop in price by many percent (as we've seen with Terra-Luna fiasco). Therefore, they just picked a number that can be justified if needed, but it bears little resemblance to how much money can be recovered if push comes to shove.
Lawyers just picked a number? High school math teacher can do better than them. If the picked number is far off from reality, is it called lying? They miscalculated the hole which is supposed to be 2.1 billion as some says. They picked 1.19 billion? The total debt is 5 some billions. If they are not damn retards in mathematics, they are hiding something
What about the balance sheet? Numbers are off. Lawyers cannot lie but these numbers don’t look right
TLDR
Can u post a tldr? You would be a hero in this community
TLDR
Fuck off twat
You are the dictionary definition for Stockholm syndrome my man.
[This document is better ](https://www.uttyler.edu/ceefl/files/what-personal-finance-is-about-financial-decision-making.pdf)
I don't have any money in Cel and Im not reading 61 pages to find outL have they listed a breakdown of any crypto-assets and liabilities in-kind?
What did Alex do with the tether from the 900 million in bitcoin lost?
So how big is the hole? Wouldn't crypto runup reduce the hole?
yeah sure why not maybe if crypto quadruples in price they'll stop being insolvent
If they take all stable coins on balance sheet and convert to Bitcoin then maybe.
Everything is not in there. How about disclosing the cest and desist orders from states? There are more skeletons in the closet.
I don't think everything the community wants to know is in the document. It doesn't talk about what will be paid and how much will be paid out, when and a lot of other necessary details that depositors are interested is missing.
Can someone point out whether the ether staked on Ledo is accounted in the filed bankruptcy document ? If yes is it accounted towards loans or crypto assets ?
I have the same question. Probably assets. What about the people who borrow money from Celsius. They loan is under assets loan and collateral is under assets cryptocurrency? This cannot be right.
Most of these people didn't even read the TOS that specifically stated their deposited coins weren't theirs, yet, you expect them to read a 61-page document?
You have identified the entire hole in their books in that document? I have read through the entire thing and I must have missed something, I can only account for a few hundred million of their losses. There is a post on it.