Celsius Failed to Record Some 7,000 Intercompany Transfers Worth Billions Leading Up to Bankruptcy

A lack of record-keeping could make it impossible to "fully reconstruct" the bankrupt crypto lender's multi-billion-dollar intercompany claim, court filings show.

AccessTimeIconFeb 17, 2023 at 11:52 a.m. UTC
Updated May 9, 2023 at 4:08 a.m. UTC
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Bankrupt crypto lender Celsius Network did not sufficiently record transactions among its affiliate companies, making it near impossible to "fully reconstruct" intercompany claims, court filings from Thursday show.

Celsius Network LLC filed Thursday's statement on the amount and type of any potential claims it held against its affiliates in response to a Feb. 9 court order from a New York bankruptcy court.

The approximately $9.1 billion intercompany claim held by Celsius Network LLC against Celsius Network Limited (CNL) based on books and records "does not take into account the shortfalls in record keeping" – including an estimated 7,000 unrecorded transactions between the two entities in the three months leading up to the bankruptcy filing.

Earlier this week, Celsius presented to the court its sale plan to fuel the company's reorganization following its Chapter 11 bankruptcy filing in July. The statement filed on Thursday reflect the company's books as of the bankruptcy petition date on July 14.

The review of the company's books showed that intercompany transfers "in many cases" were not recorded at all – the 7,000 unrecorded transfers "were not reflected via intercompany transactions in the accounting books and records."

"Given the dearth of record-keeping, it may not be possible to fully reconstruct the intercompany Claim," the statement said. "If it were at all possible, it would be a time and cost intensive forensic accounting exercise that would likely require the engagement of a forensic accounting firm to manually reconstruct every intercompany transaction at a significant cost to the Debtors’ estates."

Following "months of analysis," the best estimate for the full claim held by the LLC against CNL is $3.5 billion, the filing said.

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Sandali Handagama

Sandali Handagama is CoinDesk's deputy managing editor for policy and regulations, EMEA. She does not own any crypto.


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