This bankruptcy follows that of Voyager Digital, CoinFlex and Babel Finance, due to lack of sufficient liquidity.
Cryptocurrency investment platform Celsius announced on Wednesday that it had filed for US bankruptcy protection, a month after freezing withdrawals on its platform, in the wake of other similar services in turmoil. In its press release, Celsius indicates that it is seeking to restructure itself so as to “maximize value for all stakeholders“, and specifies having 167 million dollars of available cash to meet urgent needs by then.
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Without the withdrawal freeze decided on June 12, “their acceleration would have allowed some customers – the first to act – to be fully reimbursed, leaving the others behind to wait“Said the special committee of the board of directors of Celsius, quoted in the press release. In the United States, recourse to Chapter 11, the option chosen by Celsius on Friday, allows a company that can no longer repay its debt to restructure itself sheltered from its creditors, while continuing its current operations.
Other bankrupt companies
“It’s the right decision for our community and our company.“, assured Alex Mashinsky, the co-founder and boss of Celsius. “I am sure that when we look back on the history of Celsius, we will see this moment as crucial, a moment when we have (…) consolidated the future of the company“. Last week, cryptocurrency lending specialist Voyager Digital also filed for bankruptcy. Other companies have suspended withdrawals, such as CoinFlex and Babel Finance, due to insufficient liquidity. Singaporean investment firm Three Arrows Capital is in liquidation.
These companies wanted to play on the banking field by lending money and remunerating deposits, but they are suffering from the sharp drop in cryptocurrencies in a market that is not inclined to risky bets. Before suspending withdrawals, Celsius Network offered interest rates over 18% for savers, but 0.1% for borrowers. Celsius was one of the biggest players in the industry. He said he had 1.7 million customers in June. Bitcoin has lost more than half its value since the start of the year and is currently trading just above $20,000. It was worth nearly $69,000 at its peak in November 2021.
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