Struggling crypto lending platform Celsius files for bankruptcy

After weeks of speculation and rumour, attorneys representing crypto lending platform Celsius have officially notified regulators that the company is filing for Chapter 11 bankruptcy protection.

“This is the right decision for our community and our business,” Celsius co-founder and CEO Alex Mashinsky said in a press release late Wednesday. “We have a strong and experienced team in place to guide Celsius through this process.

“I am confident that when we look back on the history of Celsius, we will see this as a defining moment, where acting with determination and confidence served the community and strengthened the future of the company,” he said. for follow-up.

Celsius says the depot will provide the opportunity to stabilize its business and complete a comprehensive restructuring that maximizes value for all stakeholders.

According to the statement, Celsius and certain of its subsidiaries have filed “Voluntary Chapter 11 Reorganization Petitions” with the United States Bankruptcy Court for the Southern District of New York. The company boasts “sufficient liquidity with $167 million in cash to support operations.”

Celsius’ problems began after the company suspended all customer withdrawals and exchanges in June, citing liquidity concerns prompting regulators in Alabama, Kentucky, New Jersey, Texas and Washington to open surveys.

“We are taking this necessary action for the benefit of our entire community to stabilize liquidity and operations while taking steps to preserve and protect assets,” the company said at the time. “Additionally, customers will continue to earn rewards during the break, consistent with our commitment to our customers.”

Celsius spent the next month repaying his loans and outstanding debts totaling more than $1 billion.

A press release from Vermont’s Department of Financial Regulation yesterday advised Celsius investors to proceed “with caution”, saying the crypto company is “deeply insolvent and lacks assets and liquidity to meet its obligations to account holders and other creditors”.

Celsius is not registered to operate in Vermont. The state regulator also advised investors to beware of potential scams and forums promoting short compression of the CEL token.

Last week, Jason Stone, CEO of KeyFi, Inc., filed a lawsuit against Celsius. In the lawsuit, Stone alleges that Celsius used client funds to “manipulate crypto asset markets, failed to institute basic accounting controls that endangered those same deposits, and failed to deliver on promises.” .

Sunday, the the wall street journal reported that Celsius has hired attorneys from Kirkland & Ellis LLP to oversee the company’s restructuring plans, which Celsius confirmed in a statement today.

The news of Celsius filing for bankruptcy represents the latest company to crash in a harsh crypto winter, which has already claimed Voyager Digital and Three Arrows Capital.

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