Cryptocurrency lending giant, Celsius Network Ltd., has decisively filed for ‘Chapter 11 bankruptcy’, after toppling over a massive sell-off in the digital asset sector resulting in a severe financial crucnch.
The recent crypto collapse has snowballed many companies in a state of utter chaos. Prominent crypto firms including, Coinbase and BlockFi among others, have announced mass lay-offs. Even, one of the biggest crypto lenders in the world, Celsius Network, couldn’t salvage its sinking ship in this financial predicament. Recently, the New Jersey-based cryptocurrency lending platform halted withdrawals and transfers between user accounts citing ‘extreme market conditions’.
.@CelsiusNetwork is pausing all withdrawals, Swap, and transfers between accounts. Acting in the interest of our community is our top priority. Our operations continue and we will continue to share information with the community. More here: https://t.co/CvjORUICs2
— Celsius (@CelsiusNetwork) June 13, 2022
Why did Celsius File for Bankruptcy?
Moments ago, @CelsiusNetwork filed voluntary petitions for Chapter 11 protection and announced that the company initiated a financial restructuring. https://t.co/vf5wsT6TMp
— Celsius (@CelsiusNetwork) July 14, 2022
On July 14, Celsius announced that the company started a voluntary Chapter 11 proceedings in an effort to stabilize its business and figure out a financial restructuring for all stakeholders. The filing was made in the in the Southern District of New York under under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court. Celsius explained,
“This decision was made with the intention to provide the best opportunity to stabilize the business, consummate a comprehensive restructuring transaction that maximizes value for all stakeholders, and emerge from Chapter 11 positioned for success in the crypto industry.”
This decision was made with the intention to provide the best opportunity to stabilize the business, consummate a comprehensive restructuring transaction that maximizes value for all stakeholders, and emerge from Chapter 11 positioned for success in the crypto industry.
— Celsius (@CelsiusNetwork) July 14, 2022
According to the court filing, Celsius reported an estimated assets and liabilities on a consolidated basis in the range of $1 billion to $10 billion. In addition, the company has more than 100,000 creditors. To ensure a smooth transition into Chapter 11, Celsius has filed with the Court a series of ‘customary motions’ to allow the company to continue to operate in the normal course. The requests include to pay employees and continue their benefits without disruption. Celsius’s special committee of the board of directors expressed,
“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.”
Celsius Engulfed in Adversity
Recently, Celsius Network former investment manager, Jason Stone, filed a lawsuit against the crypto platform accusing Celsius of running a “Ponzi scheme”. Alex Mashinsky, Co-Founder & CEO, Celsius, highlighted the importance of the decision for the company as well as the Celsius community. He said,
“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.”
