Crypto platform Celsius files for bankruptcy in US

This comes a month after it froze withdrawals

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By AFP

Published: Thu 14 Jul 2022, 7:35 AM

Cryptocurrency investment platform Celsius announced on Wednesday that it had filed for bankruptcy in the US, a month after it froze withdrawals from its platform, in the latest sign of an industry in turmoil.

In its statement, Celsius, which suspended withdrawals in mid-June, said it was seeking to restructure in a way that would maximize value for all stakeholders, and said it had $167 million of cash available to meet urgent needs in the meantime.

Without the freeze on withdrawals, "the acceleration ... would have allowed certain customers -- those who were first to act -- to be paid in full while leaving others behind to wait," the special committee of the Celsius board of directors was quoted in the statement as saying.

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In the United States, Chapter 11 allows a company that is unable to pay its debts to restructure away from its creditors, while continuing its current operations.

"This is the right decision for our community and company," said Alex Mashinsky, co-founder and CEO of Celsius.

"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."

Last week, cryptocurrency lending specialist Voyager Digital also filed for bankruptcy.

Other companies have suspended withdrawals, such as CoinFlex and Babel Finance, due to a lack of cash.

Singaporean investment firm Three Arrows Capital is in liquidation.

Such companies were attempting to muscle in on banks by lending money and earning interest on deposits, but they are suffering from the sharp decline in cryptocurrencies in a market that is not keen on risky bets.

Before suspending withdrawals, Celsius Network offered interest rates of over 18 percent for savers, but 0.1 percent for borrowers.

Celsius was one of the largest players in the sector. It reported having 1.7 million customers in June.

Cryptocurrency bitcoin has lost more than half its value since the beginning of the year and is currently trading at just over $20,000. It was worth nearly $69,000 at its peak in November 2021.

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AFP

Published: Thu 14 Jul 2022, 7:35 AM

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