Celsius Network, one of the world’s largest cryptocurrency lenders, has filed for bankruptcy protection a month after the freeze. client assets following the dramatic turbulence in the cryptocurrency market that has disrupted the business models of several firms.
The New Jersey-headquartered startup, which was valued at $3.25 billion when it expanded its “oversubscription” Series B funding round to $750 million in November, said in a Chapter 11 bankruptcy filing in New York federal court. York that he has somewhere between $1 billion. and $10 billion in assets and liabilities and over 100,000 creditors.
The “necessary” bankruptcy decision will give the firm “an opportunity to stabilize its business,” the report said.
“We have a strong and experienced team to guide Celsius through this process,” Alex Mashinsky, co-founder and CEO of Celsius, wrote in a statement. “I am confident that as we look back on the history of Celsius, we will see this as a defining moment when decisive and confident action served the community and strengthened the future of the company.”
The announcement follows weeks of speculation about the financial strength of Celsius, which has created one of the largest crypto banks by offering customers higher returns and promising it is less risky.
Celsius allowed users to deposit their Bitcoin, Ethereum and Tether and receive weekly interest payments. Depending on the time horizon and token, the platform of the same name offers up to 18% per annum. Celsius said that 1.7 million people have called Celsius their cryptocurrency home.
Recent media investigations have revealed that Celsius has been betting heavily on unverified businesses in order to lend to major crypto companies. As demand for new loans from institutional investors began to decline last year, Celsius took even more risks, Financial Times announced on Wednesday.
Days before Celsius banned its clients from withdrawing and transferring their assets, Mashinsky posed questions to naysayers 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 generate income, we pay it to people who could never do it themselves, we take it from the rich and beat the index. It’s like going to the Olympics and getting 15 medals in 15 different areas,” he said in a video that aired in December.
The fall of Celsius followed the same fate of many digital lenders, many of whom were toppled by the collapse of crypto-currency hedge fund Three Arrows Capital, which also filed for bankruptcy this monthas well as Luna by Terraform Labs and sister token UST. Voyager Digital, a well-known crypto broker, also filed for bankruptcy earlier this month.
Celsius, which has counted WestCap and Caisse de dépôt et Placement du Québec among its backers and has raised more than $850 million from investors, said it is not currently seeking permission to resume customer withdrawals.
“In order to ensure a smooth transition to Chapter 11, Celsius has filed a series of conventional motions with the court to allow the company to continue operating as usual. These Day One motions include requests to pay employees and keep their benefits without interruption, for which the Company is awaiting court approval. Celsius does not currently request permission for customer withdrawals. Customer complaints will be handled through the Chapter 11 Celsius process. said in a press release.
Credit: techcrunch.com /