Celsius Expected To Reach Negative Liquidity By October

Zinger Key Points
  • Celsius will run out of money by October, according to court documents
  • The crypto lending firm will face nearly 80% liquidity decline in August and September

Beleaguered crypto lending platform Celsius CEL/USD is projected to reach negative liquidity of around $34 million by October this year, according to the company’s latest Chapter 11 documents.

Celsius had, on June 12, announced its decision to freeze withdrawals and transfers from its platform for its customers due to “extreme market conditions.”

The company on Sunday filed its Chapter 11 documents with the United States Bankruptcy Court of the Southern District of New York.

Liquidity to decline by 80%

Court records disclosed that Celsius' three-month cash flow estimate, which depicts sharply dropping liquidity, predicts that the firm would face a decline in liquidity funds of almost 80% from August to September.

According to estimates, Celsius will continue to record negative cash flow and will be bankrupt by the end of October.

Negative cash flow of $137.2 million

The firm anticipates generating a negative net cash flow of $137.2 million over the next three months.

According to previous court records, 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.”

Last month, Reuters reported that U.S. Bankruptcy Judge Martin Glenn had given the struggling crypto lending platform permission to use existing funds up to $3.7 million to build a new Bitcoin mining facility, with an additional amount of $1.5 million permitted to be used for customs and duties on imported Bitcoin mining rigs.

Celsius has 80,850 mining rigs

According to documents, Celsius has 80,850 mining rigs, of which 43,632 were in use, and mines about 14.2 BTC every day.

Despite the concerning figures in its cash flow prediction, the firm believes the number of Bitcoin it will mine each year is more promising.

After mining 3,114 BTC in total in 2021, Celsius anticipated mining over 10,100 BTC in 2022 and a continuous increase to 15,000 BTC in 2023.

Celsius stops monetizing BTC

Despite maintaining its mining operations, Celsius stopped monetizing the Bitcoin it earned after filing for Chapter 11 bankruptcy because it is now "financially constrained."

Lost $350 Million Due to High-Risk Trading Strategies

Recently, on-chain analysis by blockchain analytics firm Arkham Intelligence revealed that Celsius entrusted corporate funds worth around $530 million to an asset manager who engaged in high-risk leveraged crypto trading strategies, causing an apparent loss of $350 million of customer funds when the capital compared to the value of the crypto assets Celsius originally sent was returned.

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