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Celsius Network files for bankruptcy

Celsius Network files for bankruptcy

Crypto lender Celsius Network, which last month wiped out two years of gains on the value of bitcoin when it suspended customer withdrawals, has filed for Chapeter 11 bankruptcy protection.

Blaming "extreme market conditions", Celsius suspended all withdrawals, Swap, and transfers between accounts in June.

The firm, which was valued at $3.25 billion on a $750 million Series B financing round in November, allowed its 1.7 million users to deposit their bitcoin, ethereum and tether and receive weekly interest payments.

On announcing bankruptcy proceedings, founder Alex Mashinsky told the Wall Street Journal: “This is the right decision for our community and company. I am confident that when we look back at the history of Celsius, we will see this as a defining moment.”

At the time of the filing, the US company had $167m cash on hand to provide liquidity to support certain operations during the restructuring process. It listed its estimated assets and liabilities at between $1bn and $10bn on a consolidated basis.

The firm has not sought court approval to unfreeze customer accounts, noting: “Without a pause, the acceleration of withdrawals would have allowed certain customers - those who were first to act - to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery.”

As a result, customers could be exposed to losses as unsecured creditors, and their deposits are not federally insured as they would be at a bank.

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