Celsius problems: the crypto lender declared bankruptcy
By Yuliia Rokytska 2456 14 Jul 2022
Experts’ opinions about Celsius’ insolvency have been confirmed. The cryptocurrency company, which secures loans, filed an application to the New York Court for business restructuring under Chapter 11 of the U.S. Bankruptcy Code.
Celsius has filed for bankruptcy in the U.S. Court. This was reported in a press release of the cryptocurrency lender. The step of official notification to regulators was taken after weeks of rumors about the platform’s financial problems.
According to Celsius CEO Alex Mashinsky, the application will bring stability to the business by fully transforming its structure. The company’s co-founder believes bankruptcy filing is the right solution.
The cryptocurrency lender thrived during the coronavirus pandemic. It attracted customers with easily accessible loans and interest rates that are rarely found at traditional banks. But in May, amid Terra’s crash and the collapse of the cryptocurrency market, the company ran into financial troubles.
Consequently, in June, Celsius announced insufficient liquidity and suspended withdrawals for customers. After that, many regulators began their investigations against the credit platform.
However, according to official information, Celsius does not require authorization for transactions currently, the lender continues to operate as usual. The company administers $167 million in cash to provide liquidity and the restructuring process.
As a reminder, last week, KeyFi CEO Jason Stone filed a lawsuit against Celsius. In his opinion, the cryptocurrency lender misused customers’ capital, manipulated the cryptocurrency market, and did not comply with accounting.