Bankrupt crypto lender Celsius Network told the court Tuesday it had $12 million in outstanding loans to Alameda Research, the trading wing of Sam Bankman-Fried’s crypto empire.
That money – part of which is represented in locked SRM tokens held as collateral – is now likely wrapped up in Alameda’s own bankruptcy proceedings, adding another obstacle for Celsius’ creditors. It and some 130-odd other entities tied to Bankman-Fried filed for chapter 11 bankruptcy protection last week after a bank run exposed a multi-billion-dollar hole in FTX’s reserves.
Celsius’ new CEO Chris Ferraro said the company used to have much more at risk. In January 2020, for example, Celsius had $3.6 billion in total exposure to FTX Group. But it whittled down its exposure to $354 million immediately prior to its own bankruptcy filing earlier this year.
Celsius is the latest crypto company to disclose its exposure to crypto exchange FTX and trader and market maker Alameda Research.
Ferraro told the court that Celsius’ outstanding loans were part of its revenue generation, post-bankruptcy, though he admitted that the bankrupt crypto lender’s revenue is currently “obviously at a much lower clip, than it was pre-filing, pre-pause.”
Ferraro also said Celsius is generating a “moderate amount of top-line revenue” across staking deployments and its mining business.
According to Ferraro, Celsius has 37,000 mining units currently hosted by Core Scientific. Celsius has reportedly defaulted on payments to Core Scientific, which is facing its own financial trouble. Core Scientific has claimed that Celsius owes it over $5 million in unpaid bills.
Despite Celsius’ seeming inability to pay Core Scientific, Ferraro told the court that it was “incredibly strategic and important” that Celsius continue to build out a mining facility in Midland, Texas. The Midland site currently has 3,000 mining rigs, according to Ferraro.
The judge asked Ferraro if the recent price drop in bitcoin meant Celsius’ nascent mining operation was now losing money.
“From an operational perspective, we are cash flow positive,” Ferraro told the judge. “The margins are compressed – it’s probably around 20%, where we sit today, but you know, we have the ability to shut off the machines if they cost more to produce a bitcoin than the amount that we can mint it for.”