On the 31st of January, a court-appointed examiner released a report in which the examiner wrote that Celsius, a bankrupt crypto lender, used Quickbooks to keep track of its finances, meaning for its accounting. In the report, Shoba Pillay, the court-appointed examiner, wrote that this option made it challenging to assess the finances post-bankruptcy of Celcius because Quickbooks is geared specifically toward small and medium-sized businesses.
According to the court-appointed examiner, the finances of Celcius, which clients and creditors $5.5 billion, were tracked across its different divisions in 15 separate Quickbooks files. This was tracked without automatic systems in place to produce consolidated statements Celcius. The use of Quickbooks for accounting is the same method used by the FTX, which was once the biggest crypto exchange in the world and now is nothing. Regarding this move made by FTX under its founder & ex-CEO Sam Bankman-Fried, the newly appointed CEO of FTX John Ray III, criticized this process as highly disorganized. John said that nothing against QuickBooks, a very nice tool. It’s not for a multibillion-dollar company, John added.
In July 2022, a few months after when Celcius had paused customer withdrawals and swaps, the crypto lender filed for chapter 11 bankruptcy protection. At that time, Celcius had offered its customers interest amounts on deposits of crypto that were lent out to customers but stopped after the collapse of the Terra ecosystem. However, Celcius sustained only around a $30 million loss on its $990 million in Terra’s UST stablecoin holdings. According to Shoba, it was an apparent loss of confidence in the ability of Celcius to cover clients’ deposits that sparked a run on it weeks later.
According to the court-appointed examiner, two days before Celius paused withdrawals, the crypto lender received $428 million in withdrawal requests. Shoba wrote that Celcius liquidity had run dry and the liquidity crunch was amplified by a decline in Celsius’ native token CEL. These consolidated financial statements are often used by businesses to gain an overall assessment of their financial health across different divisions, but according to Shoba, Celcius started manually producing them in the second quarter of 2022. According to Shoba, these consolidated financial statements by Celcius were created to satisfy her requests for information. Celcius made several consolidation files from its historical financial records, the report alleged.
