Celsius Bankruptcy: What Happens Now?! The Latest!!

One of the first things you learn in Cryptocurrency is that if you don’t hold The private keys to your crypto wallet Then you do not own the crypto in that Wallet Unfortunately this is a lesson that many Are learning the hard way as centralized Crypto platforms and exchanges start to Go bankrupt and the latest one to bite The dust is celsius today i’m going to Give you a bit of background about Celsius explain what its bankruptcy Means in simple terms how the company Plans to recover and when its users Could get their crypto back [Music] Before we examine this train wreck i Need to protect my neck if you think i’m A financial advisor i’m afraid you’re Incorrect this right here is a purely Educational project please contact a Financial advisor if your portfolio Needs to be checked Now if this is your first time hanging Out my name is guy and crypto is what This channel is all about my mission is To create high quality crypto content That you can’t live without Coins tokens news and reviews are just a Few of the topics i scout So if you want to free yourself from Doubt subscribe to the channel and give That notification bell a clout That’s all you need to know about me

Let’s talk about celsius’s bankruptcy Now i’ve talked about celsius a lot Recently for obvious reasons and if you Want a bit of background on the company And the people behind it then i’ll leave Links to some of my previous videos in The description of this one you can Check them out later Before we go any further though i Briefly want to talk about celsius’s Sell token which is or rather was Used to earn higher interest rates on Crypto savings and pay lower interest Rates on crypto loans Note that the sell token was never sold To retail investors in the united states Nor was it available on u.s Cryptocurrency exchanges this will be Relevant later Now like many crypto platforms celsius Was known for offering high interest Rates on crypto savings celsius achieved These high interest rates by doing Anything it needed to behind the scenes To earn the yield it was promising to Its users with users crypto and the Company would keep the difference if any At its peak celsius claimed it had Around 1.7 million users who had Deposited more than 30 billion dollars Of coins and tokens onto its platform This massive amount of crypto was Earning an estimated three million Dollars in yield per day which was paid

Out weekly specifically on mondays Naturally a portion of this massive Yield was used to buy back and burn the Sell token which would cause its price To go up over time Although many critics had been warning For a long time that celsius’s business Model was unsustainable It wasn’t until the crypto market crash In may that users started to listen Closely to those critics who by that Point were claiming that celsius had Gone insolvent For a while it looked like celsius was Fine but following a big deviation Between the price of eth and lido Finance’s st eath token in early june Caused by selling of st eth It became clear that celsius was in Trouble and on the 13th of june celsius Paused all withdrawals indefinitely You can find out how exactly celsius Ended up in this situation by watching Our previous video about its collapse That will be in the description anyways After celsius paused all withdrawals Many began counting down the days to Celsius’s bankruptcy declaration For a while it again looked like celsius Was fine as the platform began paying Back hundreds of millions of dollars in Defy loans to reclaim billions in crypto Collateral And then on the 13th of july celsius

Announced that it had officially filed For chapter 11 bankruptcy exactly one Month after it had paused withdrawals And exactly one week after celsius Competitor voyager digital filed for Bankruptcy on that note you might have Heard that celsius and voyager hired the Same bankruptcy lawyers while some have Taken this as a sign that something Significant is afoot it can be simply Explained by the fact that this Particular law firm is the best that Money can buy for crypto bankruptcy Proceedings You might also have heard that filing For chapter 11 bankruptcy by both Entities was a selfish move as it gives Them total control of the assets on Their respective platforms Now besides the fact that this was Already in the terms and conditions any Alternative route would have resulted in Instant liquidation In other words if celsius or voyager had Filed for any other kind of bankruptcy The coins and tokens on their platforms Would be immediately sold This would not only mean that users have Zero chance of getting their crypto back But it would also certainly crash the Crypto market not good Now as many crypto headlines reported Celsius is around 1.2 billion dollars in The hole it has around 4.3 billion

Dollars in assets and 5.5 billion Dollars in liabilities i.e debt The thing is that celsius claims its Sell token holdings are worth 600 Million and some would argue that these Tokens are now worthless Even if they aren’t it would be Impossible for celsius to sell so much Sell without crashing the price Especially during a crypto bear market As such it’s safe to say that celsius is Closer to being 1.8 billion in the hole But again this is up for debate What’s more is that this barely Scratches the surface of the chaos that Was going on behind the scenes at Celsius as per the company’s bankruptcy Filing In section b of the introduction to the Bankruptcy filing celsius admits that it Was growing too quickly and was taking Very big risks behind the scenes that Repeatedly put it in and out of the hole So to speak Now celsius goes on to cite the crypto Crash caused by terror’s implosion as a Big factor in its bankruptcy as well as The resulting fund that began Circulating on social media after terror Collapsed leading to large amounts of User withdrawals If you watched our video about terra’s Collapse you’ll know that celsius was Actually one of the first entities to

Pull its money out of terra’s ecosystem When ust deviated from its peg hence why Celsius wasn’t directly affected by the Death spiral that unfolded in the days That followed Even so celsius admits in its bankruptcy Filing that it had also deposited large Amounts of customer crypto into Platforms and protocols from which it Could not immediately withdraw which is Why it paused user withdrawals in early June when the platform experienced a Bank run For what it’s worth celsius confirmed in Its bankruptcy filing that it’s paid off All its defy debts and has therefore Reclaimed control of its collateral Ironically this has apparently led to Concerns that celsius will eventually Sell its massive st eth position which It had been using as collateral for d5 Loans now you can learn more about st Eth and lido finance using the link in The description Anyhow later in the bankruptcy filing Celsius gives more details about what Caused the company to go bankrupt It begins by acknowledging that the Company lost around 70 million worth of Eath in the steakhound hack last year Now this is peanuts compared to the more Than 500 million dollars in collateral Celsius gave to an unspecified company For a loan which we now know to be

Equities first an investment firm based In the united states which subsequently Notified celsius that it could not pay Back the collateral when celsius came to Repay the loan it had taken out against Said collateral According to the filing equities first Has been slowly paying celsius back to The tune of 5 million a month since july And according to the financial times Equities first still has 440 million Dollars to pay back safe to say that is Going to take some time Now after talking about the effects of The pandemic and the ongoing war in Ukraine celsius talks about how the Fed’s interest rate hikes have been Crushing all asset markets you know the Usual stuff Regarding the crypto market celsius Discusses terra’s collapse how this Likely led to the collapse of crypto Hedge fund three arrows capital which in Turn led to voyager digital’s bankruptcy The depending of lido finance’s st eth Token and the rumors about celsius’s Insolvency that followed What’s interesting is that the end of Celsius’s bankruptcy filing reveals the Top 50 creditors of the crypto platform Many of whom are users As you can hopefully see the top 10 had Deposited more than 15 million each with The largest creditor being owed a

Whopping 81 million dollars Shortly after celsius filed for Bankruptcy a bunch of crazy yet expected News started to come out and the most Memorable headlines were related to Comments by timothy cradle celsius’s Former director of financial crimes Compliance who decided to speak out After the bankruptcy filing Timothy told cnbc that celsius’s Bankruptcy was fundamentally caused by The fact that they weren’t managing Their risks properly and they weren’t Even allocating capital towards Addressing these risks oddly enough Timothy said that the company wasn’t Necessarily corrupt just very poorly Managed Now i say odd because timothy also said That celsius’s real use account was much Lower than what the company claimed with The actual user count being closer to 300 000 and was only 1.7 million because Of all the fake accounts that were Inflating the figure Obviously that is not very transparent Moreover timothy told coindesk that Celsius was allegedly manipulating the Price of cell to the upside presumably When executives like ceo alex mizinski Wanted to cash out and to the downside When the company was trying to reduce Employee bonuses which were of course Paid in sell

Now it sounds like these bonuses were Pretty significant because timothy Stated that he had received a bonus in Cell tokens which he had swapped for eth And later had to pay back a portion of His bonus to celsius for unspecified Reasons This seemingly small portion was worth Close to a million dollars Now this might have something to do with The fact that the average celsius Employee was apparently making 30 000 Per month based on the company’s Bankruptcy filing as if that wasn’t Crazy enough celsius is also estimated To have spent 350 million dollars buying Back and burning sell about the same Amount that it’s estimated to have lost Through leveraged trading with its users Crypto Another former celsius employee told Cnbc that the company was not conducting Background checks on new hires and that She was explicitly told not to run a Background check on celsius’s former Chief financial officer who was Subsequently arrested for connections to Money laundering in israel She also echoed timothy’s opinion that The company was not corrupt but simply Growing too quickly and noted that Celsius employees have their money stuck On the platform too ouch This is why it’s important to keep any

Crypto you’re not actively selling or Trading in your own personal crypto Wallet and you can find out what the Best ones are using the link in the Description Anywho by this point what everyone was Waiting for was what the next step for Celsius would be and this was revealed During celsius’s first bankruptcy Hearing which took place on the 18th of July Now unfortunately any video audio or Transcript of the first hearing is Unavailable because it’s illegal to Record court proceedings like these in The united states Fortunately it’s possible to watch Celsius’s bankruptcy hearings in real Time remotely via zoom as they happen And many celsius users provided Summaries of what went down during the First hearing The tip of the spear in this regard has Been simon dixon a longtime crypto Holder investor author and founder of Bank to the future a crypto focused Investment platform Shortly after celsius’s first bankruptcy Hearing simon organized a twitter spaces Call with other celsius users and Stakeholders to discuss what went down And i’ll leave a link to the full Discussion in the description since i’ll Just be giving you a quick summary of

The main takeaways for the sake of time First and foremost it’s possible that U.s regulators could crack down on the Sell token due to how it was being used By celsius As i mentioned earlier however the fact That the cell ico wasn’t available to Retail investors in the us and wasn’t Available on u.s exchanges leads me to Believe that this probably won’t happen Second the judge presiding over the Bankruptcy case is apparently upset with Celsius’s lack of transparency which Given the circumstances is completely Understandable Third it seems that celsius was holding Some of its users assets in its Corporate wallets something that’s a big No-no as far as u.s regulators are Concerned Fourth celsius is planning to use its Crypto mining operations to dig itself Out of the hole pun intended now i’ll Come back to celsius’s recovery plan in Just a moment Fifth a committee consisting of seven to Nine celsius users and stakeholders who Were the most affected will be put Together and they will have a say in Celsius’s recovery plan As far as i understand some of these Users and stakeholders actually want Alex mazinski to stay on as ceo And speaking of alex the sixth takeaway

Is that his claims that celsius was Making most of its money from lending Crypto to institutions were revealed to Be false with the platform only lending Out around 93 million dollars of crypto To institutions though it’s not clear Where this figure is from Seventh alex will likely be forced to Resign within the next few weeks because Of how exaggerated his claims about Celsius were claims which at some points Were in direct contradiction to Celsius’s own terms and conditions It’s possible he could be hit with Criminal charges afterwards as well And finally celsius’s lawyers emphasized That social media rumors were the Primary factor that caused the run on The crypto platform and it’s not Entirely clear whether the company will Go after any specific people to try and Prove that point Now additional information about what Went down during celsius’s first hearing Can be found in an interview simon did With fellow crypto youtuber james from Invest answers I’ll leave a link to that interview in The description too the tldr there is That it’s likely the people who are Chosen to be a part of the committee Will put their interests first over Those of the broader celsius community Meaning the average celsius user may

Find themselves at the back of the queue Of whatever recovery plan is proposed That said simon believes there are three Possible outcomes A settlement between celsius and its Users which is unlikely celsius simply Waits until the crypto market recovers To become solvent again which is Unlikely And that users who want to cash out will Be able to and those who want a stake in Whatever celsius becomes will get a Stake It goes without saying that the third Option is preferable and if i understand Correctly simon wants to work with other Celsius whales to restart the company From scratch once all is said and done And do it the right way starting with Btc only To help the celsius community through These trying times simon created a Telegram group about celsius’s Bankruptcy and i’ll leave a link to the Group along with a link to my video About the best crypto telegram channels In the description Now if you’re wondering what comes next The answer is quite a bit As i mentioned a few moments ago celsius Is planning to use its crypto mining Operations to recoup its losses and pay Back its users there are just two Problems with that plan

First celsius apparently needs five Million dollars more to get its mining Operations up and running money that it Needs to pay for things like import fees And other such expenses and money which It’s not likely to get Second and more importantly crypto Mining requires a lot of investment and Lots of cash flow and celsius has Neither of the two because it’s Literally bankrupt Never mind the fact that if the crypto Market continues to crash then crypto Mining could become unprofitable More about what that could mean for btc Using the link in the description i Digress The capital intensity of crypto mining Is something that simon dixon pointed Out and why he believes it’s more than Likely that the committee of celsius Creditors will push the company to go Down a different route This ties in to the second hearing which Is scheduled to take place on monday the 8th of august and whereas the first Hearing focused on celsius the company The second hearing will focus on celsius The community By that point the celsius creditor Committee will be set up and they will Give their side of the story Based on the aforementioned twitter Spaces call celsius’s creditors will

Likely say they were misled by the Company and demand full transparency Even down to specific cryptocurrency Transactions Based on this chapter 11 bankruptcy Timeline from xclaim celsius will then Have up to six months to present a Detailed recovery plan to the celsius Creditor committee after which the Company and committee will go back and Forth for up to another six months once Both parties have come to an agreement And the plan has been approved by the Court celsius users should start to get Some of their crypto back in the months That follow but the infographic notes That repayments could take as long as Two years to complete all in all it Could take up to four years before all Celsius users get some or hopefully all Their crypto back but i must stress that This is on the longer end If everything goes smoothly celsius’s Bankruptcy case could be resolved and Repayments could be made in as little as Two years which is still quite a while Still it’s possible that the recovery Plan put forward by the committee Includes some way for celsius users to Exit early in exchange for cash likely At a discount Not only that but it’s possible that an Institutional investor of some kind will Come along and offer to buy the claims

The celsius users have on their locked Crypto likely at an even bigger discount If you ask me this second possibility is More than likely to happen as we’ve Already seen ftx offer an early exit to Voyager digital’s users following its Bankruptcy but let’s just say the terms And conditions for that deal were less Than ideal In sum then there is a long road ahead For celsius and its users but so long as Both parties continue to cooperate the Road will be a lot shorter and a lot Less painful If you want to keep up with all the Updates and read letters from other Celsius users who are affected i will Leave a link in the description And that is all for today’s video about Celsius’s bankruptcy and what comes next If you found it helpful help me out by Hitting that like button Consider subscribing to the channel too And ping that notification bell to make Sure my next video finds its way to you In the meantime you can check out coin Bureau eclipse for more crypto flicks or Tune in to the coin bureau podcast to Get quality crypto knowledge that will Last You can also follow me on twitter tiktok And instagram and join my telegram don’t Worry there’s no spam there’s also no Spam in my weekly newsletter just a

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