Celsius’ Liquidity will Worsen by October! Might Fail to Uphold Customer Obligations
October might turn out to be much worse for Celsius as the company might lose all its money
Embattled crypto lending platform, Celsius Network is on track to run out of money by October, according to the firm’s latest Chapter 11 documents. Filed on Sunday to the United States Bankruptcy Court of the Southern District of New York, Celsius highlighted that it is expected to reach negative liquidity by October 2022 to approximately US$34 million. The crypto lending platform, which held the trust of many across the world with life savings and retirement funds, was revealed to be in a much worse financial position than originally suggested in July.
Court documents revealed this week that Celsius’ three-month cash flow forecast, which shows steep declining liquidity, indicates the company will experience an approximate 80% drop in liquidity funds from August to September. The forecast predicts Celsius will continue to report a negative cash flow and, by October, completely run out of money. Over the next three months, the company is expected to accumulate a negative net cash flow of US$137.2 million. Previous court documents revealed that Celsius “operates one of the largest mining enterprises in the United States” and prior to filing for bankruptcy, had expansion plans to “mine Bitcoin by acquiring and making operational additional mining rigs.”
These findings come after Reuters reported last month that the struggling crypto lending platform was approved by U.S. Bankruptcy judge Martin Glenn to build a new Bitcoin mining facility using existing funds up to the amount of US$3.7 million, with an additional amount of $1.5 million approved to be spent on “customs and duties on imported Bitcoin mining rigs.” The document stated that Celsius is mining approximately 14.2 BTC per day, owning 80,850 mining rigs, of which 43,632 were operational. Despite the alarming numbers that their cash flow forecast suggests, the amount of Bitcoin, the company predicts, will mine each year is more promising. Having mined a total of 3,114 Bitcoin tokens in 2021, Celsius projected mining more than 10,100 BTCs in 2022, with a steady rise to 15,000 BTCs in 2023.
Celsius is yet to release a monthly statement on its website. The most recent statement the company released on July 13 was a disclosure that their “strong and experienced team” had voluntarily filed for a Chapter 11. The company kept the dire news positive, reasoning that it is “to provide the company with the opportunity to stabilize its business” to “maximize value for all stakeholders.” The reaction on social media has been mixed, with some people on Twitter staying hopeful that the Celsius recovery plan “will be very attractive” to users and others suggesting that the price of Celsius (CEL) could hit $100. Some firmly believe that Celsius can recover, despite what the cash flow suggests, with one user stating that Celsius is earning $8.5 million monthly from Bitcoin, adding that Celsius will “return stronger.”