When Celsius (CEL-USD) filed for bankruptcy last week, Bitcoin (BTC) and Ethereum (ETH) barely moved. The crypto industry believes the Celsius bankruptcy is an isolated issue.
Celsius revealed in its filing that it was in the hole for $1.2 billion. Before the filing, it froze withdrawals from its platform. Triggered by Luna’s demise, Celsius faced too many margin calls that it could not meet. It paid back over $800 million of debt to DeFi apps. It also paid back around $50 million in debt to Compound’s lending protocol.
Celsius could not get back the $40 million that 3AC, or Three Arrows Capital, owes. As of July 13, it had 23,000 outstanding loans to retail borrowers. This totaled $411 million. Crypto lending busted after terraUSD and luna collapsed in May. This month, Voyager Digital (VYGVQ) filed for bankruptcy. Voyager, which users thought held their assets safely, faces uncertainties. They are unlikely to get back 100% of their deposits.
Voyager lent money to 3AC. Unable to get back around $655 million in loans, its liabilities exceeded its assets. Voyager stock resumed trading under the new ticker VYGVQ.
Your Takeaway
Celsius is yet another causality in the cryptocurrency market. More firms will close or file for bankruptcy. Companies that are flush with cash and that do not lend or leverage are fine. For example, FTX may save many firms as the crypto winter unfolds in the summer.
