Celsius set to run out of cash by October
Court filings also showed that the Celsius does not hold enough cryptos to pay back its customers
Celsius Network, the New Jersey-based cryptocurrency lender that filed for bankruptcy in July is reported to be likely to run out of cash by October.
A court filing from Kirkland & Ellis, a law firm based in the United States which Celsius hired during the bankruptcy process, revealed financial projections that showed the crypto lender will run out of money by October.
Coindesk reported that Celsius has a cash balance of almost $130m (£108m) at the beginning of August. The crypto lender’s operating expenses and restructuring costs are expected to be $137m (£113m) over the next three months.
This means by October the company’s balance will turn negative.
Problems with Bitcoin
The same documents showed that Celsius does not hold enough Bitcoin (BTC) to pay back its customers.
Celsius owes $2.5bn (£2.07bn) in BTC. However, the firm only holds $348m (£289m) of the lead crypto and $557m (£463m) of Wrapped Bitcoin (WBTC), a tokenised version of BTC.
Fraud accusation by ex-employee
In the same month Celsius applied for bankruptcy, it was accused of crypto market manipulation and failing to hedge risk.
A lawsuit was filed in the Supreme Court of New York by Jason Stone, founder and CEO of KeyFi, an app-based platform for managing decentralised finance (DeFi) over alleged crimes.
Although KeyFi was partly acquired by Celsius, Stone went as far as to call Celsius a “Ponzi scheme”.
The complaint also alleges that Celsius has refused to honour a “handshake agreement” in which KeyFi would receive a percentage of the profits made on Celsius’s behalf.
A specific figure was not mentioned in the filing. However, it claim covers “millions of dollars” and that an agreement was reached for a profit share ranging from 7.5% to 20%.