Celsius Network
The business, the turning points, and the decisions behind them.
01 / WHAT IT BUILT
What the company did
Celsius Network was a crypto lending platform founded in 2017 by Alex Mashinsky (with co-founders Daniel Leon and Nuke Goldstein). Under slogans like 'Unbank Yourself,' it promised users high-yield returns on crypto deposits — up to 18% APY — and boomed during the 2020–2021 crypto run, growing to more than $24 billion in assets under management across about 1.7 million customers. It lent customer assets to risky DeFi protocols and counterparties and made leveraged bets including Terra, Lido's staked Ethereum token, the Grayscale GBTC fund and loans to the now-defunct hedge fund Three Arrows Capital. On June 12, 2022 it froze all withdrawals, swaps and transfers citing 'extreme market conditions,' and on July 13, 2022 it filed for Chapter 11 bankruptcy protection in New York with a $1.2 billion hole in its balance sheet — $5.5 billion in liabilities against $4.3 billion in assets, with $4.7 billion owed to users as unsecured creditors.
02 / Celsius Network FAILURE REASONS
Failure factors supported by the current evidence
Reuters (15 Jun 2022) reported Celsius froze withdrawals and transfers citing extreme market conditions after wholesale crypto investments soured, leaving it unable to meet customer redemptions in what analysts called akin to a bank run. The article tied the squeeze to TerraUSD/Anchor exposure, the BadgerDAO hack loss, and stETH positions that were hard to convert back to ether. Vermont DFR (14 Jul 2022) recorded that after the 12 Jun 2022 pause, Celsius commenced voluntary bankruptcy restructuring in S.D.N.Y. on 13 Jul 2022.
Reuters reported Celsius froze withdrawals to stabilize liquidity and was unable to meet redemptions after investments soured.
Reuters cited soured wholesale/DeFi investments including Anchor/TerraUSD, BadgerDAO, and stETH that could not readily be converted to meet ether withdrawals.
Analysts quoted by Reuters described the redemption wave as akin to a traditional bank run.
03 / EVENT HISTORY
Events in the structured record
- Founded
Founded by Alex Mashinsky, Daniel Leon and Nuke Goldstein as a crypto lending platform promising high yields on deposits.
- Peak
Grew to more than $24 billion in assets under management across about 1.7 million customers, offering up to 18% APY.
- Collapse
Froze all withdrawals on June 12 citing 'extreme market conditions'; filed for Chapter 11 on July 13 with a $1.2 billion balance-sheet deficit ($5.5B liabilities vs $4.3B assets).
- CEO exit
Mashinsky resigned on September 27; reports emerged that co-founders withdrew over $42 million in crypto in May–June before the freeze.
04 / CONTEMPORARY REBUILD ASSESSMENT
Difficulty of rebuilding this project today
Material for this section is being gathered and checked. It will appear here once ready.
Overall assessment: Not completed
05 / CAUSAL CHAIN
How the factors connect
- 01
June 12, 2022: Celsius froze all withdrawals, swaps and transfers on its platform, citing 'extreme market conditions' — one day after CEO Alex Mashinsky tweeted that not 'even one person' had problems withdrawing money.
- 02
July 13, 2022: Celsius filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York; the next day's declaration showed a $1.2 billion deficit ($5.5B liabilities, $4.3B assets), with $167 million cash on hand to fund operations during the process.
- 03
Early July 2022: the company laid off 150 employees, a quarter of its workforce.
- 04
September 27, 2022: Mashinsky resigned as CEO, saying he was 'very sorry' about customers' financial struggles; former CFO Chris Ferraro became interim CEO. Earlier, co-founders were reported to have withdrawn over $42 million in crypto (Mashinsky ~$10M in May) between May and June, before the withdrawal freeze.
- 05
Ongoing: the bankruptcy process paid down claims through liquidating and distributing assets, with the case centering on how to maximize recovery for the 1.7 million customers left waiting for their funds.