Crypto Lender Celsius Network Reveals $1.19 Billion Hole in Bankruptcy Filing

The day after its Chapter 11 petition, cryptocurrency lender Celsius Network disclosed a $1.19 billion loss on its balance sheet in a bankruptcy court statement on Thursday.

Last month, the New Jersey-based company Celsius halted withdrawals because to "extreme" market circumstances, preventing individual investors from accessing their assets and shaking the cryptocurrency market.

Additionally, Celsius said that it has $40 million in claims against Singapore-based Three Arrows Capital, a cryptocurrency hedge fund that declared bankruptcy earlier this month, in a filing on Thursday with the U.S. Bankruptcy Court for the Southern District of New York.

Approximately 23,000 retail borrowers had outstanding loans from Crypto totalling $411 million as of July 13; these loans were secured by assets with a market value of $765.5 million in digital assets.

During the COVID-19 epidemic, cryptocurrency lenders had a boom, luring depositors with high interest rates and convenient access to loans that conventional banks seldom ever gave. They profited from the differential by lending tokens to mostly institutional investors.

But following a strong cryptocurrency market sell-off sparked by the failure of terraUSD and luna in May, the lenders' business model came under fire.

This month, Voyager Digital Ltd., a different American cryptocurrency lender, filed for bankruptcy after halting deposits and withdrawals. This month, Vauld, a smaller lender in Singapore, also stopped allowing withdrawals.