Crypto Lending Platform Celsius Network Files For Bankruptcy

Illustration of cryptocurrency peeling off of smartphone

Another week, another crypto lender files for bankruptcy.

Embattled lender Celsius Network filed for Chapter 11 protection Thursday morning in an effort to “stabilize its business and consummate a comprehensive restructuring transaction,” the company said in a release.

Last week, Voyager Digital also filed for bankruptcy. In that filing, the company specifically noted that crypto hedge fund Three Arrows Capital—or 3AC—had defaulted on a loan. Singapore-based 3AC collapsed after the downturn in digital currencies left it unable to meet obligations and filed for Chapter 15 bankruptcy itself on July 1. Now its co-founders appear to be on the run from creditors.

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Celsius’ drama has lasted more than a month. It was in early June when the Hoboken, New Jersey-based company suspended withdrawals and transfers due to “extreme” market conditions.

In its filing, Celsius estimated both its assets and liabilities as between $1 billion and $10 billion and said it has more than 100,000 creditors.

What happened?

Crypto lenders have found themselves vulnerable after offering high-yield crypto loans as cryptocurrency prices have crashed this year. Values for the two largest cryptocurrencies—Bitcoin and Ether—are down more than 70% from November highs.

“This is the right decision for our community and company,” said co-founder and CEO Alex Mashinsky in the release. “We have a strong and experienced team in place 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.”

Celsius says it currently has $167 million in cash on hand—which will “provide liquidity to support certain operations during the restructuring process.”

According to Crunchbase, Celsius has raised more than $860 million in funding.

Further reading:

Illustration: Dom Guzman

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