FTX Passed on Celsius After Seeing Balance Sheet

Cryptocurrency exchange operator FTX was contemplating a deal to bail out troubled Celsius but ultimately walked away because the crypto lender’s balance sheet added up to a “$2 billion hole,” The Block reported on Thursday (June 30), citing unnamed sources with insider information.

FTX had started discussions with Celsius about providing money or acquiring the company but after looking at the firm’s finances, FTX decided to shut down the negotiations and walk, the sources told the news outlet. FTX also reportedly found Celsius tough to deal with, one of the sources said.

See also: Celsius Hires Restructuring Experts Ahead of Possible Bankruptcy

Celcius was reported to have $11.8 billion in assets in May, a big drop from the $25 billion it had last October.

Consultants from Alvarez & Marsal were reportedly hired by Celsius last week to oversee its restructuring and earlier this month the company contacted the law firm Akin Gump Strauss Hauer & Feld LLP for advice.

Read more: Report: Goldman Sachs Seeks $2B to Buy Celsius Assets

Celsius functions like a bank and invests crypto deposits from retail customers in what is essentially the wholesale crypto market. It had offered annual returns as high as 18.6%, but paused trading when bitcoin began plummeting, PYMNTS reported.

With 1.7 million customers and an estimated $12 billion in assets under management last month, Celsius halted withdrawals on June 12 and has since been hanging on by a thread with clients’ money in limbo.

Related: Collapse of Crypto Lending Platform Celsius Points to Bigger Problems

Goldman Sachs is trying to raise $2 billion toward buying the assets of Celsius at a big discount in the event the crypto firm files for bankruptcy. While lawyers for Celsius have recommended a Chapter 11 bankruptcy filing, the company is resisting that course, The Block reported.

Headquartered in Hoboken, New Jersey, and founded in 2017 by CEO Alex Mashinsky, Celsius grew at a quick pace by offering high-interest rates to users. Last year it raised $750 million at a valuation of $3.5 billion.