Tezos co-founder Kathleen Breitman says the eventual filing for bankruptcy by embattled crypto lender Celsius Network is not surprising at all.
Breitman, commenting on the unfortunate turmoil that’s threatening to suck any pending warmth from an already cold crypto winter, said the lender’s trajectory towards trouble was inevitable.
The die was cast for Celsius
According to the Tezos co-founder, a suspect business model, underpinned by the massive yield offered to investors and the crypto price crash spelled bleakness for the likes of Celsius.
So when crypto hedge fund Three Arrows Capital collapsed and filed for bankruptcy, followed by crypto brokerage Voyager Digital, the die was cast for Celsius.
The lender, which paused customer withdrawals in early June, indicated in its filing that total liabilities stand at $5.5 billion, with over $4.7 billion owed to users. However, the total assets are about $4.3 billion to leave a $1.2 billion hole in the balance sheet.
#Celsius is missing $1,190,000,000. @Mashinsky destroyed everyone. If you lost money to him or his scheme, you did so because you straight up ignored me begging to save you. pic.twitter.com/Z7BjoqkzJ8
— Richard Heart (@RichardHeartWin) July 15, 2022
Before the bankruptcy filing, Celsius had been hit by a class action lawsuit brought by a former employee. The lawsuit alleged that the crypto lender had, among other things, disregarded risk management practices and even manipulated the market by artificially inflating the price CEL, its native token.
Before hitting the wall, the lawsuit alleges Celsius had operated more like a Ponzi scheme, using new customer deposits to sustain withdrawals.
These are the events that paint a picture of a company doomed to fail.
“For those of us who’ve been in this industry for quite some time, it’s completely unsurprising that something like Celsius would go bankrupt,” she told Bloomberg Technology.
She added that this outcome was likely “because economics does have laws that transcend the word blockchain.” The unfolding, she explained, is a “shakeout” of what wouldn’t just work – especially for businesses that staked their future on “the theory that numbers will always go up.”