Home industry cryptocurrency crypto lending mogul Celsius files for insolvency
Cryptocurrency
CIO Bulletin
2022-07-14
Crypto lender Celsius Network Ltd. filed for Chapter 11 bankruptcy, the latest casualty of a $2 trillion crash that wiped out some of the sector’s most prominent names and exposed millions of individual investors to steep losses.
Celsius, which has over 100,000 creditors, said it took the step to stabilize its business and work out a restructuring for all stakeholders. The filling was made in the Southern District of New York and listed Alameda Research, the trading firm co-founded by crypto billionaire Sam Bankman-Fried, among significant creditors.
The firm, one of the most prominent cryptocurrency lenders, had amassed over $20 billion in assets by proposing interest rates as high as 18% to depositors before it stopped all withdrawals in June amid a panic run by clients. In its latest statement, Celsius said it has estimated assets and liabilities of anywhere between $1 billion and $10 billion.
Celsius Network’s troubles are emblematic of the digital asset space’s problems. Rising US interest rates have sent investors fleeing and triggered the collapse of lenders and hedge funds. Crypto broker Voyager Digital Ltd. filed Chapter 11 bankruptcy protection this month, while liquidators have called in for bankrupt crypto hedge fund Three Arrows Capital.
The firm has $167 million in cash, which will provide liquidity to support specific operations during the restructuring process.
Celsius froze withdrawals and transfers last month, citing “extreme” market conditions, leaving its 1.7 million customers unable to redeem their assets. This prompted state securities regulators in New Jersey, Texas, and Washington to investigate the decision.
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