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Cryptocurrency lender Celsius Network files for bankruptcy

written by Bella Palmer
celsius-network

Celsius had paused withdrawals and transfers between accounts last month, blaming extreme market conditions

The cryptocurrency lender Celsius Network has announced it has filed for bankruptcy.

Crypto lending has tumbled in the recent months following a crash in cryptocurrency prices and the collapse of major token TerraUSD in May.

Celsius had paused withdrawals and transfers between accounts last month, blaming extreme market conditions. State securities regulators in New Jersey, Texas and Washington had stepped in to investigate the crypto lender’s decision.

Announcing Celsius had filed for Chapter 11 protection, members of the special committee of the board of directors said on Wednesday: Today’s filing follows the difficult but necessary decision by Celsius last month to pause withdrawals, swaps, and transfers on its platform to stabilise its business and protect its customers.

Without a pause, the acceleration of withdrawals would have allowed certain customers – those who were first to act – to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery, they said.

The US company said it had $167m cash on hand to provide liquidity to support certain operations during the restructuring process. It listed its estimated assets and liabilities at between $1bn and $10bn on a consolidated basis.

The ‘necessary’ decision to file for bankruptcy would provide the firm an ‘opportunity to stabilise its business,’ it said.

We have a strong and experienced team in place to lead Celsius through this process, wrote Alex Mashinsky, co-founder and chief executive of Celsius, in a statement. 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.

Celsius was not requesting authority to allow customer withdrawals at this time, the company said in a press release, adding that it had filed court motions to allow it to continue operations in the normal course.

Customer claims would be addressed through the Chapter 11 process, Celsius said.

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