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Celsius Network Files for Bankruptcy a Month After Pausing Withdrawals

Celsius Network has filed for Chapter 11 bankruptcy in New York. The embattled crypto lender announced this news on July 13, noting that it voluntarily initiated the bankruptcy process. In doing so, Celsius hopes to stabilize its business and start a restructuring procedure that maximizes value for all stakeholders.

Per the announcement, Celsius and some of its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the US Bankruptcy Code. The entities filed the petitions in the US Bankruptcy Court for the Southern District of New York.

Celsius co-founder and CEO Alex Mashinsky commented:

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.

Celsius Plans to Keep Operating

The company allegedly has $167 million in cash on hand, which it plans to use to fund specific operations. Celsius plans to continue operating during the restructuring process. To this end, it has filed several customary motions, including requests to pay employees and continue their benefits.

However, Celsius has not requested power to permit customer withdrawals and hopes to address this in the Chapter 11 process.

Following the bankruptcy filing, CEL, the native token of the Celsius Network, has witnessed massive selling pressure. At the time of writing, CEL is down 15.31% over the past 24 hours to trade at $0.6332.

This news comes after Celsius paused withdrawals, swaps, and transfers on June 13, citing extreme market conditions. While the company has struggled to stay afloat, the poor performance of the crypto market complicated the recovery process.

Crypto Lenders Continue Going Under

Celsius’ liquidity problems played a role in triggering the current bear market. As a result of poor market performance, crypto lender Voyager also filed for Chapter 11 bankruptcy weeks after suspending withdrawals.

Vauld, a Singapore-based crypto lending platform, also halted withdrawals, deposits, and trading, citing financial difficulties. Hoping to bail out Vauld, Nexo announced that it intends to purchase the beleaguered lender. Nexo even signed a term sheet to acquire 100% of Vauld.

It is worth noting that Nexo previously offered to acquire Celsius’ qualifying assets after it froze withdrawals.

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