Celsius Network filed for bankruptcy
Celsius Network suspended withdrawals from its platform a month ago due to market volatility, joining a list of major exchanges that banned or limited withdrawals. Now, the troubled crypto lender filed voluntary petitions for Chapter 11 protection and announced that it had already initiated a financial restructuring. Celsius hired several well-known law firms to assist them in the process of financial restructuring. Celsius Token (CEL) fell by more than 40% on hearing the news. Some people still have hopes that the withdrawal pause was temporary. What’s next in this saga?
On July 13, Celsius Network, one of the largest crypto lenders, filed voluntary petitions for Chapter 11 protection in the Southern District of New York. Alex Mashinsky, the company’s Co-Founder & CEO, announced that they had already initiated a financial restructuring. The statement revealed a staggering $1.2 billion hole in the company’s balance sheet. Celsius hired several well-known law firms, including Kirkland and Ellis, to assist them in the process of financial restructuring.
According to Chapter 1, a company can be allowed to reorganize its finances while it’s still in operation. However, when these processes are in place, shareholders have lower priority and therefore are unlikely to get a return on their money.
The troubled crypto company suspended withdrawals from its platform a month ago due to market volatility, joining a list of major exchanges that banned or limited withdrawals. It looks as though Celsius became one more casualty of the current crypto winter, joining the list of big names that were not ready for the market downturn.
A few state regulators are going to check the company after a lawsuit brought by former investment manager Jason Stone where it has been named a Ponzi scheme. There are reasonable grounds to believe this might be the case as Celsius offered its users too-good-to-be-true interest rates (up to 19%) for keeping their crypto with them, and then lent out the funds, having amassed over $20 billion in assets. The public pressure keeps mounting on Celsius amid a severe crypto crisis.