Celsius Network files for bankruptcy

The popular American crypto lender “Celsius Network” reported this Wednesday through a statement on its blog that it has declared bankruptcy, becoming the latest victim in the cryptocurrency sector that collapses after the sharp drop in the prices of the main assets. digital.

"We announce that Celsius voluntarily filed petitions for Chapter 11 reorganization." Said crypto lender Celsius Network in the blog post.

Chapter 11 is a US law that allows companies in the country with economic problems to reorganize under the protection of the law.

Celsius Network is headquartered in New Jersey and prior to its collapse it operated with assets and liabilities on a consolidated basis in the range of $1 billion to $10 billion.

In the wake of the Covid-19 pandemic, crypto lenders grew exponentially, luring depositors with high interest rates and easy access to loans rarely offered by traditional banks. However, the prices of cryptocurrencies have plummeted in recent months, causing the collapse of important platforms in the ecosystem.

For example, on July 6, crypto lender Voyager Digital Ltd filed for bankruptcy after suspending withdrawals and deposits from its customers.

“Celsius is not requesting authority to allow customer withdrawals at this time. Customer claims will be addressed through the Chapter 11 process.” The company clarified through a press release on Wednesday. And he further added that he has filed a series of “usual motions” with the court to allow him to continue operations in the normal course.

Celsius currently has $167 million in cash on hand, which will provide liquidity to support certain operations during its restructuring process.
Regulatory institutions warn about Celsius Network

On June 13, Celsius Network froze all withdrawals and transfers on its platform, citing "extreme conditions" that left its 1.7 million customers unable to trade their assets.

"I am confident that when we look back on Celsius's history, we will see it as a defining moment, when acting with determination and confidence served the community and strengthened the future of the company." Said Alex Mashinsky, co-founder and CEO of Celsius.

This Tuesday, through a statement, the Vermont Department of Financial Regulation recommended that investors in Celsius "proceed with caution." This is because the crypto company is "deeply insolvent and lacks the assets and liquidity to honor its obligations to creditors."

Additionally, the Vermont Department of Financial Regulation warned of “rumors and scams” ​​regarding the “CEL” token developed by Celsius Network.

"Investors should be wary of any communication or suggestions that they put their accounts in HODL mode and invest more in CEL tokens." The Vermont regulator warned.

Last Sunday, the WSJ reported that Celsius Network had hired the lawyers of the firm "Kirkland & Ellis LLP", replacing the firm "Akin Gump Strauss Hauer & Feld LLP" hired in June. According to the crypto lender, the new lawyers would be at the forefront of its “restructuring process”, at that time the company did not comment on the possibility of bankruptcy.

The recent Celsius news adds to the list of crypto companies that collapsed during the current crypto winter, which has also seen the collapse of Voyager Digital and Three Arrows Capital.