Celsius Crypto Lender Filed For Bankruptcy: Report

Celsius crypto lender filed for bankruptcy today with $167 million left in cash as we are reading more today in our latest cryptocurrency news.

After weeks of speculation, the lawyers representign the crypto lending platform Celsius finally notified regulators that the Celsius crypto lender filed for Chapter 11 bankruptcy protection. The co-founder and CEO Alex Mashinsky said:

“This is the right decision for our community and company.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.”

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

Celsius said that the filing will provide the opportunity to stabilize the business and consummate the restructuring that will maximize the value of the stakeholders. As per the release, Celsius and other subsidiaries filed voluntary petitions for the reorganization under chapter 11 in the US Bankruptcy Court for the Southern District of New york. The company touted ample liqudity with $167 million in cash that will be used to support operations.

Celsius troubles started after the company paused the customer withdrawals and swaps in June due to liquidity issues that prompted regulators from New Jersey, Kentucky, Alabama, Texas, and Washington to open investigations. At that time, the company wrote:

“We are taking this necessary action for the benefit of our entire community in order to stabilize liquidity and operations while we take steps to preserve and protect assets. Furthermore, customers will continue to accrue rewards during the pause in line with our commitment to our customers.”

Celsius spent the next month paying back the loans and the debts totaling over $1 billion. The press release by the Vermont Department of Financial Regulation advised Celsius investors and proceed with caution saying that the crypto company is insolvent and lacks the assets with the liquidity to honor the obligations and account holders as well as other creditors. Celsius is not registered to operate in Vermont and the regulator also advised investors to beware of scams and forums that encourage short squeezing of the CEL token.

Jason Stone as the CEO of KeyFi filed a lawsuit against Celsius where she alleged that the Celsius platform used customer funds to manipulate the crypto markets and failed to institute basic accounting controls that endangered the same deposits and faield to carry through the promises. The Wall Street Journal also reported that Celsius hired lawyers from Kirkland and Ellis LLP to oversee the restructuring plans which Celsius confirmed.

The news of the company filing for bankruptcy is the last step in the collapse during the harsh crypto winter which already took down three arrows capital and Voyager digital.