Crypto lending platform Celsius files for bankruptcy protection
By Carine Lee
Updated
Celsius Network announced on Wednesday that it has filed for voluntary Chapter 11 bankruptcy in the US becoming the latest company in the cryptocurrency sector to succumb to the recent plunge in prices.
The crypto lender, with $167m (£141m) in cash on hand, has filed a series of customary motions with the court to allow the company to continue operations and to ensure a smooth transition into Chapter 11, according to a statement.
However, Celsius is not requesting authority to allow customer withdrawals at this time and customer claims will be addressed through the Chapter 11 process.
Celsius is a peer-to-peer platform for decentralized finance (DeFi), allowing users to borrow, lend and trade a broad range of cryptocurrencies, including mainstream ones such as BTC, ETH and MATIC.
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The filing comes after Celsius’ decision last month to freeze withdrawals and transfers, which saw wild price movements. The company cited "extreme" market conditions, leaving its 1.7 million customers unable to redeem their assets.
It was recently reported that Celsius has been making loan repayments since mid-June and has so far repaid $183m of its collateralized cryptocurrency debt to MakerDAO, one of the largest decentralized lending platforms, according to blockchain data.
The debt was repaid in Maker protocol’s native stablecoin, DAI.
Members of a Celsius board special committee said in a statement that the decision to file for bankruptcy is designed to stabilize the company's business and protect its customers. Celsius CEO Alex Mashinsky said: “This is the right decision for our community and company.”
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The New Jersey-based crypto lender listed estimated assets and liabilities on a consolidated basis in the range of $1bn to $10bn, according to a filing with the US Bankruptcy Court for the Southern District of New York.
According to a recent court filing from the crypto lender’s advisory partner Kirkland & Ellis, Celsius has a $1.2b hole in its balance sheet.
The filing with the same court also showed that Celsius has $4.3b in assets, of which about $600m in its CEL token, and $5.5b in liabilities. The crypto lender said in the filing that it has a total market capitalization for CEL of about $170.3m as of July 12.
Index company XOUT Capital CEO and founder David Barse, and fiduciary services firm Drivetrain founder and managing member Alan Carr will be providing Celsius with their leadership and expertise. Both Barse and Carr have more than 25 years experience in business, according to the statement.
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