What happened now? The Celsius Network, one of the largest cryptocurrency lenders, filed for Chapter 11 bankruptcy a month after it suspended all withdrawals, swaps and transfers between accounts of its 1.7 million customers due to “extreme market conditions”. The latest development has called into question whether users will ever be able to access the money they have invested in the platform.
The Celsius network was one of first big loss cryptocurrency crash after TerraUSD collapse. The decentralized finance (DeFi) platform, which operated by collecting client deposits that it lent to others to generate income, froze account withdrawals and transfers last month due to “extreme market conditions.” Celsius said that clients will “reward” during the pause, although receiving any interest on the cryptocurrency they hold seems like wishful thinking right now.
in ad that it has filed for Chapter 11 bankruptcy protection, Board Select Committee members said: “Today’s filing follows Celsius’ difficult but necessary decision last month to suspend withdrawals, swaps and transfers on its platform in order to stabilize your business. and protect your clients.
“Without a pause, speeding up withdrawals would allow some clients – those who acted first – to get paid in full, while others would be left to wait for Celsius to profit from illiquid or long-term asset allocation activities before they get a recovery.”
Celsius has 100,000 lenders, which can include both clients and businesses. The largest unsecured claim reportedly is $81 million from Cayman-based Pharos fund. CNBCand he owes a $12 million unsecured loan to Alameda Research.
The company says it has $167 million in cash to provide liquidity to support certain operations in the restructuring process, while its assets and liabilities are valued at between $1 billion and $10 billion on a consolidated basis. It does not currently request permission for customer withdrawals.
The concern of clients is that they may not get their money back due to bankruptcy. Celsius’s terms and conditions state that bankruptcy proceedings could result in the “total loss of any and all digital assets,” though the company is currently considering a restructuring rather than liquidation.
CEO Alex Mashinsky said: “We will see this as a defining moment where decisive and confident action has served society and strengthened the company’s future.” It is hard to imagine that many customers who have given their savings to Celsius would agree with this statement.
Credit: www.techspot.com /