Celsius Update: Troubled Crypto Lender Finally Releases Periodic Report on Subsidiaries

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Crypto Regulation
Celsius Update: Troubled Crypto Lender Finally Releases Periodic Report on Subsidiaries

After complaints from the U.S. Trustee, Celsius Network has finally filed an operating report showing a detailed breakdown of the revenues and expenses of business entities with a substantial or controlling interest.

Delays in Filing Report Show a Lack of Transparency

Celsius is required to file these periodic reports every month. The first report was supposed to have been filed in mid-August, with the second coming on September 15. Celsius critics, including bankruptcy lawyer David Adler, have pointed to the delay in filing the reports as further proof of the bankrupt crypto lender’s lack of transparency.

The Periodic Report for July shows that Celsius has substantial or controlling interests in 15 entities, including subsidiaries in Serbia, Lithuania, Israel, Cyprus, Australia, and Gibraltar. The report also shows the crypto company has 100% ownership of Celsius Mining, GK8, and KN Media Manager, a shell company that was registered in January in Delaware.

Only Six Celsius Subsidiaries Are Currently Active

The report also indicated that of the 15, only six were active. The active subsidiaries include Celsius Europe, the network’s IT and R&D wing, and the Israel-based Celsius Network IL, which owns the Celsius platform IP and other support services.

Other active subsidiaries are GK8, which owns the IP for the crypto lender’s proprietary cold storage solutions, and Celsius Services. This entity runs customer service and support operations on behalf of Celsius Network.

Celsius Mining, which only recently received permission from the bankruptcy court to resume Bitcoin mining operations, is listed as dormant and inactive in the Periodic Report.

Value of Assets Drops by More Than $100 Million

According to the report, on the last day of 2021, the Celsius subsidiaries listed as non-debtors had combined total assets valued at about $400 million. But as of June 30, the subsidiaries had shaved off more than $110 million from the value of their combined assets, which currently stand just north of $290 million.

Most of the assets belong to the Israel-based Celsius Network IL and the Lithuania-based Celsius EU. The report shows that as of June 30, Celsius EU had total assets valued at $144 million, while those of Celsius Network IL were valued at about $134 million.

The Periodic Report also shows that as of June 30, 2022, five Celsius subsidiaries had incurred losses of about $13.9 million. However, in the same period, Celsius EU and Celsius Network Europe posted net incomes of $173.4 million and $114.3 million, respectively.

Celsius Files Payment Schedule for Insiders

In addition to the reports on its controlled entities, Celsius filed a schedule of payments made to company insiders in August. According to the filing, Celsius spent more than $500k on the wages and expenses of 17 senior employees.

According to the schedule, the highest-paid employee was Celsius Network’s Chief Operating Officer, Aslihan Denizkurdu, who received $115,385. The schedule also indicated that Celsius CEO Alex Mashinsky earned $38,462 in wages. Celsius Mining’s Chief Administrative Officer, David Albert, received $26,263 in salaries and expense payments.

Celsius’s former Chief Financial Officer, Rod Bolger, was paid $43,269. Bolger was at the center of the storm in August when the crypto lender filed a motion to rehire him as a consultant in its bankruptcy proceedings. However, the company rescinded its decision hours before the motion was due to be reviewed in court.

Bolger, who resigned from his position on June 30, would have earned about $92K for six weeks’ work. Chris Ferraro, who replaced Bolger as CFO, was shown in the schedule to have earned $46,154.

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