On Wednesday, July 13, crypto lender Celsius filed for Chapter 11 bankruptcy claiming that the company will proceed with reorganization and protect its customers’ interests. However, some dark details regarding Celsius operations have emerged from the documents that it submitted.
As per the document, the company has around $4.3 billion in assets and liabilities worth $5.5 billion. Thus, there’s a clear $1.2 billion holder on the company’s balance sheet. Interestingly, user deposits make a majority of liabilities at a staggering 4.72 billion.
Looking at the company’s assets, Celsius has $.175 billion in crypto assets, $720 million in assets, and $600 million in its native CEL tokens. Interestingly, the entire turn of events has led to the valuations of CEL tokens dropping to $320 million.
Why Celsius Is Operating As a Shadow Bank?
Frances Coppola, a crypto skeptic economist shared a blog post on Thursday, July 14, explaining her concerns with Celsius’ operations. In her blog post, Coppola argues that Celsius is running a ‘shadow bank’ which is nothing but an unregulated financial intermediary with no deposit insurance.
The economist further argues that depositors in Celsius won’t get their money back. Coppola writes:
