Celsius Network noted a $1.19 billion deficit on its balance sheet in a bankruptcy court filed Thursday, a day after the cryptocurrency lender filed for Chapter 11 bankruptcy.
New Jersey-based Celsius froze withdrawals last month, citing “extreme” market conditions, cutting off access to savings for individual investors and sending tremors through the crypto market.
In the US bankruptcy court filing for New York’s Southern District on Thursday, Celsius also said it had $40 million in claims against Singapore-based Three Arrows Capital, a crypto hedge fund that filed for bankruptcy earlier this month.
As of July 13, Crypto had approximately 23,000 outstanding loans to private borrowers totaling $411 million, backed by collateral with a market value of $765.5 million in digital assets, it added.
Crypto lenders boomed during the Covid-19 pandemic, attracting depositors with high interest rates and easy access to loans rarely offered by traditional banks. They lent tokens to mainly institutional investors and made a profit with the difference.
But the lenders’ business model came under scrutiny after a sharp crypto market sell-off, spurred by the collapse of major tokens terraUSD and luna in May.
Another US cryptocurrency lender, Voyager Digital Ltd, filed for bankruptcy this month after suspending withdrawals and deposits. Singapore’s Vauld, a smaller lender, also froze withdrawals this month.