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:
- Mergers & Money: As Summer Approaches, Emerging Crypto Winter Gets Darker
- Crypto Market Tumult Drops Bitcoin To 18-Month Low
- Crypto Bear Market Here A While
Illustration: Dom Guzman
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