Cryptocurrency lender Celsius Network has announced that it has filed for bankruptcy.
Crypto lending has collapsed in recent months following a crash in cryptocurrency prices and the collapse of the underlying TerraUSD token in May.
Celsius paused withdrawals and transfers between accounts last month, blaming extreme market conditions. State securities regulators in New Jersey, Texas and Washington stepped in to investigate the crypto lender’s decision.
In announcing that Celsius had filed for Chapter 11 protection, members of the special committee of the board of directors said on Wednesday: “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.
“Without a pause, the acceleration of withdrawals would have allowed certain customers – those who acted first – to be paid in full, while others were left to wait for Celsius to collect value from illiquid or long-term asset deployment activities before receiving refunds.” “
The US company said it has $167 million in cash to provide liquidity to support certain operations during the restructuring process. It listed its estimated assets and liabilities as between $1 billion and $10 billion on a consolidated basis.
Celsius has not sought an authority to authorize customer withdrawals at this time, the company said in a press release, adding that it has filed legal motions to allow business to continue as normal.
Customer claims will be handled through the Chapter 11 process, Celsius said.
With Reuters
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