Celsius has been battling to stay afloat since the start of the bear market. However, the crypto lender is on the verge of sinking after it filed for Chapter 11 bankruptcy in the Southern District of New York. According to data from Trading View, this action has slumped the CEL by 48.85%.
The firm defended this move in a press release stating that the filing will enable them to carry out a restructuring process to provide the best outcomes for stakeholders.
“Today’s filing follows Celsius’s difficult but necessary decision last month to pause withdrawals, swaps, and transfers on its platform to stabilise its business and protect its customers.
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,” said the company’s board.
In addition, CEO Alex Mashinsky asserted that this was the right decision for all involved.
“We have a strong and experienced team to lead Celsius through this process. I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company,”
Related: Goldman Sachs Gathers $2 Million to Buy Celsius’ Assets as Network Faces Bankruptcy.
Celsius to Limit Operations
The bankrupt firm made a case for the company to continue operations during the restructuring process. The company says it currently has $167 million cash in hand and proposes to use it to continue operations, including employee payments and benefits.
However, the firm is not seeking to reopen customer withdrawals.
Additionally, there have been weeks of widespread rumours and speculation that the crypto lender would file for bankruptcy. However, for weeks it appeared that the firm was doing everything to avoid this outcome, making over $1 billion in repayments to debtors. With Wednesday’s filing, Celsius has put any doubt to rest, dealing another blow to account holders.
The crypto lender had initially stopped operations on June 12 because of the market collapse. Notably, before revealing insolvency concerns, the firm had offered depositors returns as high as 17%.
