Celsius CFO Says Company’s Cash Flow Will See It Through 2022

Celsius’ Chief Financial Officer has said that the embattled lender has sufficient cash to make it to the end of the year.

This turn of events comes hot on the heels of a court filing on Aug. 14, 2022, by law firm Kirkland & Ellis LLP, revealing that Celsius’ liquidity can only sustain it until the end of Oct. 2022.

Celsius paused customer withdrawals in early June as it ran into liquidity problems from a market downturn that also took down crypto hedge fund Three Arrows Capital and prompted others to request creditor moratoria from courts.

Since then, the company has filed for Chapter 11 bankruptcy and faced many lawsuits from creditors seeking restitution.

Celsius to receive loan repayment and save money on mining

Speaking for CEO Alex Mashinsky on a call with creditors, CFO Chris Ferraro said Celsius would receive $61 million in loans from Tether-owned Bitfinex and save $20 million on taxes and sales of mining rigs.  

Previously, the company had said its cash flow was negative and would incur $147 million in losses from mining activities. The company also holds 15,000 BTC and 23,000 wBTC from deposits totaling 100000 BTC.

Nevertheless, it continues to plow ahead with its mining operations.

On July 19, 2022, a federal court approved Celsius’ request to sell bitcoins to generate income, for which the company subsequently spent some of its $40 million cash. It remains to be seen whether this is a successful strategy, as the company’s takings from mined bitcoin totaled $8.7 million in July, insufficient to cover its operating costs.

It also used funds from a $600 million financing round led by CPDQ and Westcap to invest in mining infrastructure.

Ferraro also said the company is not asking retail borrowers to pay back interest on loans.

Loans and more loans

The Mashinsky-led company has received multiple bailout offers, including one from Ripple Labs. Whether the offers are equities-based or debt-based is unclear. Bankruptcy loans are a double-edged sword for the bankrupt company, as its valuable assets become collateral that lenders can lay claim to if the company fails to repay the loan.

Celsius recently made a loan repayment of $142 million to MakerDAO, the issuer of the DAI stablecoin.

FTX, which recently extended a credit line to Voyager Digital, a crypto broking firm that recently filed for bankruptcy, had notably refused to extend financing to Celsius after reviewing its balance sheet.

Kirkland and Ellis maintain that Celsius’s trouble stemmed from falling crypto prices rather than mismanagement.

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