‘Consumer Business Is Dead’ for Crypto Lender Celsius, Bankruptcy Expert Says

Thomas Braziel, a partner at 507 Capital, also told CoinDesk TV’s “First Mover” customers may get back only 50 to 60 cents on the dollar.

AccessTimeIconAug 18, 2022 at 3:30 p.m. UTC
Updated May 11, 2023 at 6:50 p.m. UTC
Layer 2
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

Retail customers of bankrupt crypto lender Celsius Network are likely to recover just a portion of their funds at best and “the consumer business is dead” for Celsius, Thomas Braziel, founder of investment firm 507 Capital, said.

Recoveries could be “between 50 to 60 cents on the dollar,” Braziel said Wednesday on CoinDesk's "First Mover" program.

In June, Celsius froze withdrawals, citing extreme market conditions, as it faced a liquidity crisis, and in July, it filed for Chapter 11 bankruptcy protection in the Southern District of New York.

During its first court hearing, Celsius proposed a restructuring plan focused on its mining operations and said it had a $1.2 billion hole in its balance sheet. It's not known yet whether mining bitcoin (BTC) can materially “increase or decrease recovery,” Braziel said .

If the price of bitcoin were to rise, it “could be a salvation to the estate,” Braziel said.

Still, it's unclear whether retail customers will be able to recover their funds, even as the lending platform tries to pay off its remaining decentralized- finance (DeFi) loans.

Braziel said while it’s a “high likelihood” that retail customers will “get something back,” questions of when that will happen have yet to be answered. He said that a typical bankruptcy proceeding could take six to 18 months.

Braziel, who bought claims from creditors during the bankruptcy of Tokyo-based hacked bitcoin exchange Mt. Gox, said one difference between that situation and Celsius is the longer wait Mt. Gox creditors had to endure. Those creditors couldn’t sell their bitcoin but that ended up being to their benefit as bitcoin prices shot up astronomically during the bankruptcy proceedings.

“Forced 'hodl' can be a good thing,” Braziel said.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Fran Velasquez

Fran is CoinDesk's TV writer and reporter.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.