One of the Largest Crypto Lenders Celsius Files for Bankruptcy

Celsius Network, one of the world's largest cryptocurrency lenders, has filed for bankruptcy, a month after freezing customer assets following a severe turbulence in the crypto market that has upended the business models of several companies.

The New Jersey-based startup, which was valued at $3.25 billion when it extended its "oversubscribed" Series B funding round to $750 million in November, said in a filing. bankruptcy (Chapter 11) in federal court in New York that it had anywhere between $1 billion and $10 billion in assets and liabilities and over 100,000 creditors.

The "necessary" decision to file for bankruptcy would provide the company with an "opportunity to stabilize its business", he said.

"We have a strong and experienced team in place to lead Celsius through this process," wrote Celsius co-founder and CEO Alex Mashinsky in a statement. "I am confident that when we look back on the history of Celsius, we will see this as a defining moment, where acting with determination and confidence served the community and strengthened the future of the company."

The announcement follows weeks of speculation about the financial strength of Celsius, which created one of the biggest crypto banks by offering better returns to clients and promising it was less risky.

Celsius allowed users to deposit their Bitcoin, Ethereum, and Tether and receive weekly interest payments. Depending on the time horizon and the token, the eponymous platform offers up to 18% interest per year. Celsius said 1.7 million people call "Celsius their crypto home".

Recent media investigations revealed that Celsius took large bets on untested companies to lend to major crypto firms. As demand for new loans from institutional investors began to slow last year, Celsius took even bigger risks, the Financial Times reported on Wednesday.

Days before Celsius blocked its clients from withdrawing and transferring their assets, Mashinsky polled skeptics on Twitter and accused them of spreading "FUD", referring to fear, uncertainty and doubt.

“The beauty of what Celsius has been able to do is that we deliver returns, we pay them to people who could never do it themselves, we take them from the rich and beat the index. It's like going to the Olympics and winning 15 medals in 15 different areas," he said in a video released in December.

Celsius' fall follows the same fate for many digital lenders, many of whom were devastated by the collapse of crypto hedge fund Three Arrows Capital, which also filed for bankruptcy this month, and Terraform Labs' Luna and its sister token UST. Voyager Digital, a top crypto broker, also filed for bankruptcy earlier this month.

Celsius, which counts WestCap and the Caisse de depot et placement du Quebec among its backers and has raised more than $850 million from investors, said it is not seeking approval to resume operations. customer withdrawals at the moment.

"To ensure a smooth transition to Chapter 11, Celsius has filed a customary series of motions with the Court to allow the company to continue to operate in the normal course. These "day one" motions include claims for employees to be paid and to continue their benefits without interruption, for which the Company expects to receive court approval.Celsius is not seeking approval to authorize customer withdrawals at this time. customers will be processed through the Chapter 11 process,” Celsius said in a press release.