One month after the lender said it was suspending withdrawals, Celsius filed for Chapter 11. The company said that the petitions for reorganization give them the best chance to stabilizing the business, complete a comprehensive restructuring transaction that maximizes value for all stakeholders, and emerge from Chapter 11 positioned for success in thecryptocurrencies industry.
Celsius said in an FAQ that withdrawals are still suspended. Celsius intends to put forward a plan that will restore activity on the platform. It didn't give a time frame for allowing withdrawals and other suspended transactions again.
On June 12, 2022, we made the difficult but necessary decision to pause withdrawals, Swap, and transfers on our platform to stabilize our business and protect our customers.
Most account activity will be paused until further notice. Withdrawals, Swap, and transfers between accounts will remain paused, and rewards will stop accruing as of the date of the filing. Celsius is not requesting authority [from the bankruptcy court] to allow customer withdrawals at this time.
Celsius will not be issuing new loans at this time. Celsius said that if it hadn't halted withdrawals, certain customers would have been paid in full and others would have been left behind.
Alex Mashinsky, the CEO of Celsius, asked a critic, "do you know even one person who has a problem withdrawing from Celsius?", shortly before the company suspended withdrawals.
AdvertisementAccording to a court filing, Celsius has assets between $1 billion and $10 billion, as well as liabilities between $1 billion and $10 billion. A creditor is an entity that had a claim against the debtor before the filing.
The largest option available is more than 100,000, which is included in the court filing's section. There are 1.7 million people who call Celsius their home.
Celsius is one of a wave of digital asset companies that have frozen assets and entered restructuring amid a sharp sell-off in Cryptocurrencies this year. Three Arrows Capital filed for Chapter 11 on July 1st, while Voyager Digital filed for Chapter 11 on July 6th.
Celsius has $167 million in cash on hand to support certain operations, according to a press release. The company's filings in US Bankruptcy Court for the Southern District of New York include requests to pay employees and continue their benefits without interruption, for which the company expects to receive Court approval. Chapter 11 will be used to address customer claims.
The company apologized for the lack of communication after suspending withdrawals. "We apologize that communication with our teams and community has been very limited over the past few weeks, and we look forward to being able to offer greater transparency with everyone through our reorganization, which encourages dialogue with all stakeholders."
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