Celsius is bankrupt.
Embattled crypto lender Celsius and its subsidiaries on Wednesday filed for Chapter 11 bankruptcy in the Southern District of New York, confirming suspicions from analysts.
The firm disclosed in its press release that the filing enables them to carry out a restructuring process to provide the best outcomes for stakeholders.
“Today’s filing follows the difficult but necessary decision by Celsius last month to pause withdrawals, swaps, and transfers on its platform to stabilize 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,” said the company’s board.
“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,” added CEO Alex Mashinsky, asserting that this was the right decision for all involved.
In its filing, it is worth noting that the now bankrupt crypto lender makes a case for the company to continue operations during the restructuring process. The company says it currently has $167 million cash in hand and proposes to use it to continue operations, including employee payments and benefits.
However, the firm maintains that it is not seeking to reopen customer withdrawals.
It is worth noting that there have been weeks of widespread rumors and speculation that the crypto lender would file for bankruptcy. However, for weeks it appeared that the firm was doing everything to avoid this outcome, making over $1 billion in repayments to debtors. With Wednesday’s filing, Celsius has put any doubt to rest, dealing another blow to account holders.
Celsius Chapter 11 filing comes just over a week after fellow crypto lender Voyager filed for Chapter 11 bankruptcy in New York. Notably, as reported by The Crypto Basic, account holders with the firm are not likely to receive full repayments.
Celsius, on June 12, disclosed it was halting customer withdrawals owing to the unfavorable crypto market conditions. Notably, before revealing insolvency concerns, the firm had offered depositors returns as high as 17%.
Regulators in six states in the US are currently investigating the company, with Vermont joining in on Tuesday, expressing the belief that the lender is “deeply insolvent.” Celsius also faces a lawsuit from a former money manager who accuses the firm of fraud and market manipulation.