Another crypto lender, Celsius Network, has sought bankruptcy protection in the U.S. “Customer claims will be addressed through the Chapter 11 process,” the company said. Voyager Digital, and Three Arrows Capital (3AC), were also among the crypto companies that have filed for bankruptcy protection.
Celsius follows Voyager and files for Chapter 11 bankruptcy
Crypto lender Celsius Network announced Wednesday that it has “filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York.”
Alex Mashinsky is the CEO and cofounder of Celsius.
It is the best decision for both our company and community.
The company stated that the bankruptcy filing aims “to provide the company with the opportunity to stabilize its business and consummate a comprehensive restructuring transaction that maximizes value for all stakeholders.”
Noting that it will continue to operate, the company explained: “Celsius has $167 million in cash on hand, which will provide ample liquidity to support certain operations during the restructuring process.”
Celsius has halted all withdrawals, swaps, or transfers from its platform since last month. After the firm’s decision, the U.S. Securities and Exchange Commission and various state regulators began to investigate.
According to Wednesday’s announcement:
Celsius does not request authority for customer withdrawals. Chapter 11 will handle customer claims.
State Regulator Believes Celsius Is ‘Deeply Insolvent’
One of the regulators in Vermont, the Department of Financial Regulation is investigating Celsius. According to the regulator, the firm was involved in unregistered securities offerings in several jurisdictions including Vermont.
“Due to its failure to register its interest accounts as securities, Celsius customers did not receive critical disclosures about its financial condition, investing activities, risk factors, and ability to repay its obligations to depositors and other creditors,” the regulator detailed, adding:
Celsius, according to the Department is believed to be insolvent. The Department lacks both assets and liquidity that would allow it to pay its creditors.
Voyager Digital was also filing for Chapter 11 bankruptcy this week. The company cited “prolonged volatility and contagion in the crypto markets” and the default of crypto hedge fund Three Arrows Capital (3AC) on a loan as the reasons for its decision to file for bankruptcy protection.
Days before Voyager’s bankruptcy filing, Three Arrows Capital filed for Chapter 15 bankruptcy protection in the U.S. 3AC was frozen this week by a bankruptcy court judge.
Do you have any thoughts about Celsius declaring bankruptcy under Chapter 11? Please leave your comments below.
Images CreditsShutterstock. Pixabay. Wiki Commons
DisclaimerThis article serves informational purposes. This article is not intended to be a solicitation or offer to sell or buy any product, service, or company. Bitcoin.com is not a provider of investment, tax, legal or accounting advice. This article does not contain any information, products, or advice that can be used to cause or alleged result in any kind of damage.