Celsius files for bankruptcy

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Cryptolending platform Celsius Network and some of its subsidiaries have filed for bankruptcy in a New York court.

Application filed pursuant to Chapter 11 of the United States Bankruptcy Code. The company hopes that the restructuring will "maximize value for all stakeholders."

“Today’s intercession follows a difficult butthe necessary decision by Celsius last month to suspend withdrawals, exchanges and transfers on the platform in order to stabilize its business and protect customers,” the company said.

Celsius said it has $167 million in cash to provide liquidity to support certain operations in the restructuring process.

The company emphasized that since the application was submitted, most of the operations on the platform are suspended, but it will continue to work.

On July 13, Celsius repaid the last major DeFi loan in the Compound protocol and withdrew just under $200 million in WBTC, and the day before, the loan in the Aave protocol, freeing up more than 400,000 stETH collateral.

Amid the announcement, the price of the CEL token fell by 17%, according to CoinGecko.

Let us remind you that on June 13 the platform suspended withdrawalsfunds, exchange and transfers between accounts. At the time, the company explained this as “extreme market conditions,” but analysts suggested that the real reason for what happened was a “liquidity crisis.”

On July 7, Celsius fully repaid the loan in the MakerDAO DeFi protocol and withdrew a total of 23,962 WBTC collateral worth ~$490 million.

Lawyers called the company's bankruptcy practicallyinevitable, and the Vermont Department of Financial Regulation declared it “grossly insolvent.” It was reported that the platform's existing investors agreed to the restructuring, but would refrain from making new investments in the project. 

Prior to Celsius, hedge fund Three Arrows Capital and cryptocurrency broker Voyager Digital also filed for bankruptcy.