- Celsius has half a million creditors owed more than $5 billion.
- There is still hope for Celsius investors as the company intends to recoup its losses through its mining subsidiary.
- Lawyers asked the court for over $5 million to complete the construction of their mining center in Texas.
Celsius, the crypto lender that recently filed for Chapter 11 bankruptcy, has half a million creditors owed more than $5 billion, according to attorneys for the company who made the statement at its first bankruptcy hearing on Monday.
News of Celsius’ liquidity crisis broke on June 12, as the company announced that it was pausing all customer withdrawals. The reason for the hold on the accounts was apparently “extreme market conditions.” Shortly after, the company filed for Chapter 11 bankruptcy protection in the Southern District of New York last week.
Court filings paint a concerning picture for Celsius’ creditors, the majority of which are average retail investors. The court filings revealed that there is a minimum $1.2 billion hole in Celsius’ balance sheet. Due to this fact, depositors who held their crypto in Celsius accounts will likely be the last to get paid back.
Celsius is not dead in the water just yet, and investors do have some hope, as Monday’s hearing, together with a bunch of court documents, indicates that much of Celsius’ plan to recoup its losses relies heavily on the projected future profits of its half-finished, wholly-owned mining subsidiary — Celsius Mining.
The problem is that the subsidiary is also a debtor. Lawyers for Celsius asked the court on Monday to approve over $5 million in spending to complete the construction of the mining center in Texas. According to the lawyers, the construction will take approximately two months to complete.
The money will also be used to pay duties on mining rigs that are currently sitting with customs authorities.
Even though Judge Martin Glenn, the chief judge of the US Bankruptcy Court in the Southern District of New York, approved the request on an interim basis, the US Trustee, the Department of Justice’s arm that oversees the administration of bankruptcy cases, will still be holding the purse strings.