Celsius, a crypto lending platform, files for bankruptcy

Celsius Network Ltd., a cryptocurrency lender, has filed for Chapter 11 bankruptcy, becoming the latest casualty of a $2 trillion crisis that has wiped out some of the industry’s largest companies and exposed hundreds of thousands of ordinary investors to significant losses.

Celsius, which has over 100,000 creditors, stated that the action was taken to stabilize the company and work out a restructuring for all stakeholders. The case was submitted in the Southern District of New York, and among the significant creditors was Alameda Research, the trading business co-founded by crypto millionaire Sam Bankman-Fried.

“This is the right decision for our community and company,” Celsius Co-Founder & CEO Alex Mashinsky stated in a press release posted late Wednesday. “We have a strong and experienced team in place to lead Celsius through this process.

“I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company,” he continued.

Celsius asserts that the filing would allow it to stabilize its company and complete a comprehensive restructuring that optimizes value for all stakeholders.

Celsius and certain of its subsidiaries, according to the announcement, filed “voluntary petitions for reorganization under Chapter 11” in the United States Bankruptcy Court for the Southern District of New York. “Ample liquidity with $167 million in cash to support operations,” the corporation claims.

Celsius’ problems began in June, when the business halted all customer withdrawals and swaps due to liquidity concerns, forcing authorities in Alabama, Kentucky, New Jersey, Texas, and Washington to launch investigations.

“We are taking this necessary action for the benefit of our entire community in order to stabilize liquidity and operations while we preserve and protect assets,” the firm stated at the time.”Furthermore, customers will continue to accrue rewards during the pause in line with our commitment to our customers.”

Celsius spent the next month repaying loans and bills totalling more than $1 billion.

The lending site, which offered consumers high-yield loans of up to 18% on cryptocurrency deposits, paused all customer withdrawals, swaps, and transfers little over a month ago, claiming liquidity concerns. They have not yet been unfrozen.

After markets began to sink in early May, the firm was one among the first crypto-lending companies to freeze accounts, and others have since followed suit, including Babel Finance, CoinFLEX, and Voyager.

According to a report published on Sunday, the corporation replaced lawyers appointed only weeks ago to monitor the firm’s reorganization process. Recently, Vermont’s financial regulator declared Celsius “deeply insolvent,” claiming that earlier comments made by Mashinsky and other firm employees concerning the protection of customer assets were “untrue.” Celsius is being investigated by Vermont authorities, as well as those in at least five other states, for its decision to freeze client accounts.