A month after freezing customer assets in the wake of a sharp turbulence in thecryptocurrencies market, Celsius Network has filed for Chapter 11.
The New Jersey-headquartered startup, which was valued at $3.25 billion when it extended its Series B financing round to $750 million in November, said in a Chapter 11 bankruptcy filing that it had between $1 billion and $10 billion in assets.
It said that the firm's decision to file for bankruptcy would give it an opportunity to restructure.
Alex Mashinsky wrote in a statement that Celsius has a strong and experienced team in place. When we look back at the history of Celsius, we will see that acting with resolve and confidence served the community and strengthened the future of the company.
There has been a lot of speculation about the financial strength of Celsius, which was established by offering better returns to customers and promising that it was less risky.
Users were able to deposit and receive weekly interest on their funds. The platform offers as much as 18% interest a year. 1.7 million people call Celsius their home.
According to recent media investigations, Celsius took great bets on ventures that were not proven to work. The demand for new loans from institutional investors began to slow last year and Celsius took even greater risks.
Prior to Celsius blocking its customers from withdrawing and transferring their assets, Mashinsky was questioning skeptics on social media.
The beauty of Celsius is that they pay the people who wouldn't be able to do it themselves, and they beat the index. He said in a video that it was like going to the Olympics and getting 15 medals in 15 different fields.
The collapse of Three Arrows Capital and Terraform Labs' Luna and its sister token UST have led to the fall of Celsius. Earlier this month, a high-profile digital broker filed for Chapter 11.
Celsius, which raised over $850 million from investors, is not requesting authority to resume customer withdrawals at this time.
Celsius has filed a series of motions with the court to ensure a smooth transition into Chapter 11. The Company expects to receive court approval for these first day motions, which include requests to pay employees and continue their benefits. Customer withdrawals are not being requested by Celsius at the moment. Chapter 11 will be used to address customer claims.