Embattled crypto lender 'Celsius' files for bankruptcy
Categories: Crypto News US
Embattled crypto lender 'Celsius' files for bankruptcy
In what some have described as the "Lehman moment" of crypto, troubled lender Celsius has officially filed for "financial restructuring" under Chapter 11 of the US Bankruptcy Code. For many in the industry, Celsius has been one of the more controversial businesses, with many calling its yield volatile. These claims go back to 2019, reflected in a “discussion” where company founder Alex Mashinsky clashed with bitcoiners Tone Vays and Saffedian Ammos about the company’s business model.
In many ways, the writing was on the wall as warning bells began to sound in April as Celsius halted interest accounts for users. Later in June, the company halted user withdrawals, but only after sending US$320 million to crypto exchange FTX. As crypto broker Voyager filed for bankruptcy, in addition to crypto lender Wold freezing withdrawals, many felt it would be a matter of time before Celsius collapsed.
At the end of 13 July, Celsius finally confirmed that it was "initiating voluntary Chapter 11 proceedings to stabilize its business and complete a comprehensive restructuring transaction that maximizes value for all stakeholders". While the company apparently has some US$167 million in cash, it noted that preliminary approval will be sought to allow payments to employees, but it "does not request authorization to allow customer withdrawals at this time.