Celsius Missed 7,000 Intercompany Transactions Worth Billions Before Bankruptcy

According to court documents, a lack of recordkeeping might make it hard to “completely reconstruct” the multibillion-dollar intercompany claim of the insolvent crypto lender.

The insolvent cryptocurrency lender Celsius Network did not adequately record transactions between its affiliated firms, making it almost hard to “completely reconstruct” intercompany claims, according to court documents filed on Thursday.

In response to a February 9 court order from a New York bankruptcy court, Celsius Network LLC submitted a statement on Thursday detailing the amount and nature of any possible claims it had against its affiliates.

Books and records indicate that Celsius Network LLC has a $9.1 billion intercompany claim against Celsius Network Limited (CNL), but this “does not take into consideration the deficiencies in record keeping,” such as the 7,000 or so transactions that occurred between the two companies in the three months prior to the bankruptcy filing.

After filing for Chapter 11 bankruptcy in July, Celsius provided the court with its selling strategy to fund the company’s recovery earlier this week. Thursday’s filing reflects the company’s financial standing as of July 14, when the bankruptcy petition was filed.

The audit of the company’s accounts revealed that intercompany transfers were not documented in “many situations” — the 7,000 unrecorded transfers “were not represented through intercompany transactions in the accounting books and records.”

Considering the lack of documentation, it may not be able to recreate the intercompany Claim in its entirety, according to the statement. If at all practicable, it would be a time- and cost-intensive forensic accounting effort that would likely need the appointment of a forensic accounting firm to manually rebuild each intercompany transaction at a substantial expense to the Debtors’ estates.

According to the document, after “months of investigation,” the best estimate for the total claim held by the LLC against CNL is $3.5 billion.

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