Celsius Network LLC has a roughly $1.2 billion hole in its balance sheet, with the majority of its liabilities owed to the cryptocurrency lender’s users, according to a Thursday filing by Chief Executive Alex Mashinsky, WSJ Pro Bankruptcy reported. Of Celsius’s $5.5 billion in total liabilities, more than $4.7 billion is owed to Celsius’s users, according to the declaration Mr. Mashinsky submitted to bankruptcy court. Users deposited their cryptocurrencies on the platform in exchange for high yields, and Celsius lent out and invested user deposits. Celsius stopped all customer withdrawals a month before it filed for bankruptcy, finding that as the value of cryptocurrencies collapsed, it would be detrimental to the business to allow the withdrawals to continue as normal, according to Mr. Mashinsky. Celsius’s terms of use raise questions about whether users may be able to recover their cryptocurrency deposits or collateral. Mr. Mashinsky said the basis of the contract between Celsius and its users explicitly stated that the company has ownership rights over customer deposits, as well as the right to lend, sell, transfer or use them for any period of time.
