On June 12th, crypto lender Celsius Network announced that it was hitting a pause on its withdrawals and transfer services. Since then, the company has remained in the headlines because of the financial hardships it is facing.

It took about a month for it to file for Chapter 11 bankruptcy in the United States. Two days after the company filed for bankruptcy, two people with knowledge of the matter reported that EquitiesFirst is the private lending platform that owes a whopping $439 million to the crypto lender.

Celsius’ problems

In the last couple of weeks, liquidations, bankruptcies, and insolvencies have become quite widespread in the crypto market, leading to talk of contagion.

There are three prominent companies that have filed for bankruptcy within weeks of each other. This includes a crypto hedge fund called Three Arrows Capital (3AC), crypto lender Celsius Network and digital asset exchange Voyager Digital.

31 days after pausing withdrawals on its platform, Celsius Network made a bankruptcy filing in the US on July 13th, 2022. Before it did so, there had been speculation in June’s second week that the funds of the crypto lending protocol were locked in some decentralized finance (DeFi) protocols. There was talk that immediate adjustment was needed for these funds, or they would end up getting liquidated.

A couple of days before the lending platform filed for bankruptcy, reports had said that millions worth of USDC coins were transferred from the company’s wallets to pay off loans in Aave and Compound DeFi protocols. Upon its bankruptcy filing, it was disclosed that Celsius Network had a lot of debtors.

EquitiesFirst

The Financial Times reported on July 15th that EquitiesFirst was one of the debtors of the crypto lending platform and that two people close to the matter had said that it owed a sum of $439 million. The investment company was launched in 2002 and it specializes in long-term financing, which is backed by assets.

Even though it primarily manages stocks, EquitiesFirst also dipped its toes into the crypto market in 2016. Johnny Heng, the head and managing director of EquitiesFirst, talked about crypto back in April. He mentioned that they had only dealt with equity initially, but it was a couple of years ago that they had also begun to offer loans against cryptocurrencies.

He added that this business had taken off in the last few years. A spokesperson for the company said that they had had a conversation with their client and had agreed to extend their obligations.

Celsius’ token

Before Celsius Network filed for bankruptcy, some of the investors of its token CEL had tried to short squeeze it. But, once the crypto lender made the bankruptcy filing, the price of the CEL token plunged by 58% against the US dollar.

However, it did eventually rebound, as statistics confirmed. On July 16th, the numbers showed that there had been a 30% gain in the CEL token’s value within the last 30 days, which highlighted its recovery.