Crypto Lender Celsius Files for Chapter 11 Bankruptcy Protection
Following a turbulent month, the crypto lender Celsius has announced that it’s filed for Chapter 11 bankruptcy protection. According to CNBC, the company has more than 100,000 creditors, including individual customers. The filing also notes that the company has $167 million in cash on hand as it continues to operate.
In a statement, Celsius co-founder and CEO Alex Mashinsky said of the filing, “This is the right decision for our community and company. 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 first made headlines last month when it announced that it was pausing certain transactions on the platform — including withdrawals — citing extreme market conditions. As the company stated at the time, “We are working with a singular focus: to protect and preserve assets to meet our obligations to customers. Our ultimate objective is stabilizing liquidity and restoring withdrawals, Swap, and transfers between accounts as quickly as possible.” They added, “There is a lot of work ahead as we consider various options, this process will take time, and there may be delays.”
Prior to the pause, Celsius seemed to be on an upward trend, reporting 1.7 million customers as of last month. Furthermore, the company had originated more than $8 billion in loans and had $12 billion in assets under management. Part of the appeal of the platform for customers was the high yields on crypto loans, which were as high as 17%.
Unfortunately, Celsius isn’t the only crypto-centric firm to fall on hard times as of late. Last week, Voyager Digital also filed for Chapter 11 bankruptcy protection. Meanwhile, Gemini founders Cameron and Tyler Winklevoss disclosed last month that the company would be laying off approximately 10% of its staff. Like others, the Winklevosses referred to the “Crypto winter” as the reason behind the move.
Ultimately, while Celsius may be confident about their prospects of exiting Chapter 11 in a stronger position, others aren’t as optimistic. Of course, crypto volatility does work both ways, with potential value increases likely benefiting the firm. On the other hand, the trust many customers may have had in Celsius has undoubtedly been impacted by the continued pause on withdrawals. In any case, the saga of Celsius is sure to be an interesting one as it continues to be written.
Also published on Medium.