Celsius files for bankruptcy protection
Troubled US cryptocurrency lender Celsius Network has filed for Chapter 11 bankruptcy protection, it was confirmed on Thursday.
The firm, which has already paused customer withdrawals, said the move would allow it to "stabilise the business and consummate a comprehensive restructuring transaction that maximises value for all stakeholders".
Alex Mashinsky, co-founder and chief executive, added: "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 is a defining moment."
Cryptocurrencies have been in meltdown this year, leaving specialist lenders facing cash crunches and higher customer redemptions as prices plunge. Bitcoin, the world’s most actively traded cryptocurrency, has lost 58% of its value so far this year, ether is down 71% date and terraUSD collapsed in May. Rival US lender Voyager Digital filed for bankruptcy last week.
Last month Celsius blamed the market turmoil for the "difficult but necessary decision" to halt withdrawals, swaps and transfers on its platform, trapping billions of dollars across more than a million accounts.
According to the Chapter 11 filing, Celsius - which will continue to trade during the bankruptcy process - has liabilities of between $1bn and $10bn, more than 100,000 creditors, and assets also between $1bn and $10bn.
In a blog post published alongside the official announcement, Celsius also apologised for its "very limited" communication in recent weeks, but pledged greater transparency going forward.
Walid Koudmani, chief market analyst at XTB, said: "This decision has brought even more doubts to the crypto space. As the Celsius situation develops, it will be essential to see how the company manages to resolve some key issues that are deeply rooted in its business model and if it can restore faith in the crypto lending side of the industry, which for the time being has appeared to be promising but highly unstable and unreliable in times of excessive volatility."
As at 0930 BST bitcoin was trading below $20,000, down 1% at $19,947.5.