From $25 billion to $167 million: How a major crypto lender collapsed and dragged many investors down with it
Celsius filing for bankruptcy this week surprised virtually no one. Once a platform freezes customer assets, it’s typically all over. But even though it was expected, it remains a really big deal for the industry. In October 2021, CEO Alex Mashinsky said the crypto lender had $25 billion in assets under management. Even as recently as May — despite crashing cryptocurrency prices — the lender was managing about $11.8 billion in assets, according to its website. The firm had another $8 billion in client loans, making it one of the world’s biggest names in crypto lending. Now, Celsius is down to $167 million “in cash on hand,” which it says will provide “ample liquidity” to support operations during the restructuring process. Meanwhile, Celsius owes its users around $4.7 billion, according to its bankruptcy filing — and there’s an approximate $1.2 billion hole in its balance sheet. It goes to show that leverage is one hell of a drug, but the moment you suck out all that liquidity, it’s a whole lot harder to keep the party going. The fall of Celsius marks the third major bankruptcy in the crypto ecosystem in two weeks, and it is being billed as crypto’s Lehman Brothers moment — comparing the contagion effect of a failed crypto lender to the fall of a major Wall Street bank that ultimately foretold the 2008 mortgage debt and financial crisis.