Celsius Files for Bankruptcy a Month After Freezing Withdrawals, Amid Ongoing Industry Turmoil

Celsius said in a statement that it had $167 million of cash available to meet urgent needs.

Celsius Files for Bankruptcy a Month After Freezing Withdrawals, Amid Ongoing Industry Turmoil

Photo Credit: Facebook/ Celsius Network

Celsius said it was seeking to restructure to maximise value for all stakeholders

Highlights
  • Bitcoin has lost more than half its value since the beginning of the year
  • Singaporean investment firm Three Arrows Capital is in liquidation
  • Celsius was one of the largest players in the sector

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 maximise value for all stakeholders, and said it had $167 million (roughly Rs. 1,300 crore) 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.

In the US, 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 (roughly Rs. 15,96,900). It was worth nearly $69,000 (roughly Rs. 55,09,200) at its peak in November 2021.


Will crypto tax hurt the industry in India? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.
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