FTX Walked Away From Celsius Deal After Seeing Defi Lender's Poor Finances: Report

Cryptocurrency exchange FTX was initially interested in making a deal with Celsius, a decentralized finance (DeFi) lending and borrowing firm, but reportedly walked away after looking at the monetary state of the firm.

The crypto exchange was interested in bailing out Celsius in its hard times as it is rumored to be insolvent following liquidity issues. The firm had over $8 billion lent out to clients and $12 billion in assets under management (AUM) in May but halted withdrawals in June after it didn't have the funds to pay back its clients, TheBlock reported, citing two sources with knowledge of the matter.

According to the report, FTX was also considering acquiring Celsius but refrained from doing so after looking at a $2 billion hole in the DeFi lender's balance sheet. The sources also added that FTX found the nearly insolvent firm “difficult to deal with.”

Celsius has been practically silent and the last update on the situation was on June 19 when the firm claimed that it "continues to be stabilizing our liquidity and operations. This process will take time."

Interestingly, lawyers hired by the firm are advocating for Chapter 11 bankruptcy while the firm is unwilling to submit to its poor economic conditions. According to sources, the executives want Celsius users to enable the "HODL" to show support for the platform. They also want to avoid "lengthy and painful" bankruptcy proceedings.

On the other hand, FTX CEO Sam Bankman-Fried pointed out earlier this week that many crypto exchanges and related firms are "secretly insolvent."

The crypto exchange helped BlockFi and Voyager Digital during the current bearish situation by opening a $250 million credit line with the former and committing $500 million in financing to the latter.