Celsius, the now-bankrupt cryptocurrency lender, used QuickBooks to track its finances. This became apparent after a court-appointed examiner investigated the company. The bankrupt crypto exchange FTX also used QuickBooks as an accounting program.
Finances kept in 15 files
This accounting program was originally intended for small to medium-sized businesses. That such a large company as Celsius used it made it unnecessarily difficult to assess the company’s finances.
According to the examiner, Celsius’s finances have been tracked in 15 different QuickBooks files. There were no automatic systems in place to produce consolidated statements for the crypto lender that currently owes customers and creditors some $5.5 billion.
FTX also used QuickBooks. However, the company’s new CEO, John Ray III, criticized this approach. “While I have nothing against QuickBooks, it’s a nice tool, but it’s not made for a multi-million dollar company,” said Ray III.
Problems at Celsius have been around for some time
Although Celsius incurred a relatively small loss of $30 million on its $990 million of Terra’s UST holdings, the loss led to a loss of confidence in Celsius’ ability to cover customer deposits. This in turn led to a huge amount of withdrawal requests. The lender received withdrawal requests worth $428 million. Subsequently, their resulting liquidity crisis was exacerbated by a steep fall in the value of Celsius’s CEL token.
The financial statements side of the company was also not completely in order. While consolidated financial statements are normally used to provide an overall assessment of their financial health, Celsius only began producing them in the 2nd quarter of last year. They also did this manually. All this does not promote the course of events.
The examiner also reportedly requested access to the QuickBooks account on November 30 of last year, but access was not granted until a week later. Subsequently, certain figures did not seem quite right.
For example, “several entries in the QuickBooks general ledger would be dated as of the last day of the respective quarters, but would not be included in the balances on Celsius’s summary financial statements,” the examiner wrote.
The examiner’s report concluded by finding several issues with Celsius from at least the year 2020, now showing that the lender at one point took hefty loans to keep its businesses afloat and managed to lose money while cryptocurrencies also thrived.