Troubled cryptocurrency lending firm Celsius filed for bankruptcy yesterday in the Southern District of New York. The filing does not provide much information into the company’s operations because the company has many businesses. The opaque nature of cryptocurrency markets and its complex web of relationships between different players make it even more difficult to accurately determine its effect on the cryptocurrency ecosystem.

Celsius stated that it has $170 million in cash and is running a deficit of $1.2 billion with respect to its assets. The company’s filing states that roughly $300,000 was historically required to cover operational costs, such as employee payroll. A further $2.5 million was needed for operational and maintenance costs.

Here are some interesting points of note from the document.

Celsius’ Business Is Complicated

I contain multitudes, wrote Walt Whitman. He has competition in Celsius. The beleaguered lending firm contains eight entities within its umbrella. Based on its bankruptcy filing, it is a bank, a brokerage, a custodian, a cryptocurrency miner, and a lending firm. These entities collectively control 14 bank accounts. A schematic in the filing illustrates the relationships between these accounts.

Six accounts, related to the company’s lending business, have paused operations.

Most of the company’s transactions occur in 11 bank accounts, at Signature Bank, between various Celsius entities. One can only make guesses about the nature of interactions between these accounts since we don’t know much about the company’s operations and exposure to other firms.

Only A Small Fraction of Celsius Users Are Affected By The Pause In Withdrawals

Celsius claims to have 1.7 million users in the filing. But only 300,000 users out of that total figure have account balances greater than $100. This means that most Celsius users will lose less than $100, if it fails to repay them.

Alameda And Its Alumni Are All Over Celsius

Is it possible to escape Sam Bankman-Fried (SBF) and Alameda Research’s tentacles in the crypto ecosystem? I think not. Two of the biggest unsecured creditors to Celsius are Alameda Research and another company founded by one of its alumni.

The biggest unsecured creditor to Celsius is Pharos USD Fund based in Cayman Islands. The lending firm owes $81 million to Pharos. A little bit of digging via the fund’s contact information listed in Celsius’ filing led me to Lantern Ventures, a London-based digital asset trading firm that donates 50% of its profits to “highly effective” charities.

The firm was founded in 2020 and is led by Tara MacAulay, an Alameda Research co-founder. According to CB Insights, Lantern Ventures raised $100,000 from investors in 2020 and currently has around $400 million assets under management (AUM). Celsius owes $12.7 million to Alameda Research. SBF is supposed to have considered acquiring Celsius but abandoned the effort after finding a “$2 billion hole” in its balance sheet.

I attempted to contact other creditors listed in Celsius’ filing. One of them, ICB Solutions, had Google Voice screening for all calls. The person I spoke to refused to divulge his name and said he’d get back after finishing “an aquarium visit” with his kids. ICB does not have a website and is owed $13.3 million from Celsius. There is not much information available about the Caen Group, another unsecured creditor to the company, a limited liability company based in California.

Celsius And Its DeFi Exposure

According to the filing, Celsius had loans of $648 million at decentralized platform (DeFi) platforms. These were collateralized by $1.61 billion in crypto assets. Such loans are made using smart contracts that encode and enforce loan terms algorithmically. Many recent pieces have documented Celsius’ repayment of its loans.

But they do not provide much detail into the terms and circumstances of those loans. For example, did an expiration of loan terms necessitate Celsius’ repayment? The answer is unclear, and the filing does not provide an answer.

Another important question here relates to the order in which creditors are repaid. Debt tranches are common in traditional finance. That is, creditors are repaid in the order of the seniority of their debt. Does Celsius’ repayment of its DeFi loans mean that the lending firm’s customers are the last in line for repayment?