The Celsius platform declares itself bankrupt, another victim of the fall of cryptocurrencies

After several weeks of crisis, Celsius, one of the largest cryptocurrency lending platforms, has just declared bankruptcy. Billions of dollars are at stake, but the founders believe they have avoided the worst.

The fall in cryptocurrency prices has made a new victim: Celsius. The lending platform filed for bankruptcy in the United States on July 13 in a press release. ” This is the right decision for our community and for our business. “, Specified in this one Alex Mashinsky, co-founder and leader of Celsius. ” We have a strong and experienced team in place to guide us through this process “.

It’s a crypto bomb: Celsius is one of the largest crypto-lending platforms, and it handles a large number of individuals’ assets. But Celsius’ declaration of bankruptcy is not quite the death knell for it yet. U.S. law actually regulates bankruptcy in a very precise way, and in the case of Celsius, who indicated that it was following a procedure known as “Chapter 11″, it is in fact a transaction of ” restructuring That’s not good news, though, though the worst may have been avoided.

The price of cryptocurrencies is still falling sharply // Source: Maxim Hopman / Unsplash

What’s happening to Celsius now?

Chapter 11 bankruptcy proceedings are special legal proceedings. It is companies that are asking for it and the law places them under the protection of a court while they restructure and clean up their accounts. This allows them to remain in control and generally continue part of their activity, with the consent of the judges.

In the case of Celsius, the leaders state that they have asked the court to be able to continue certain operations, for ” ensure normal operation “. Celsius thus asked the judges to be able to pay its employees, which was approved. However, Celsius did not seek permission to allow withdrawals again, so customer funds are still blocked.

In the press release, Celsius supports its decision to freeze withdrawal operations last month. ” Without this break, withdrawals would have increased and would have given some customers, the fastest to trade, to walk away with all their money. without necessarily leaving much to others. It is therefore to avoid this scenario of massive retreats, like what the Terra ecosystem experienced during its collapse, that Celsius continues to block funds.

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The Celsius platform has declared bankruptcy // Source: Nino Barney for Numerama

The document announcing Celsius’ bankruptcy petition, which is available online and viewed by The Verge, states that Celsius is currently administering “ between $ 1 and $ 10 billion in assets, but that the platform is indebted at the same level. In its press release, Celsius also stated that it had ” $ 167 million in cash ‘At his disposal, an amount which’ will be more than enough to support certain operations during the restructuring process “.

Celsius’ problems are not new: they started just a month ago when, to everyone’s surprise, the platform announced that it was freezing payouts. Celsius at the time quoted ” extreme conditions to justify the termination of operations, citing the sharp and prolonged fall in cryptocurrency prices. However, Celsius is one of the largest crypto-lending platforms, valued at over $ 3 billion last year, and manages over $ 24 billion in assets at its peak. The news of the withdrawal stop had therefore created some panic in the community.

Celsius is not the only giant experiencing problems: Investment Fund 3 Arrows Capital also declared bankruptcy in early July – albeit under far more restrictive conditions. The company, which managed billions of dollars in assets, worked with many professionals and individuals who could lose significant sums.

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