Another crypto lender, Celsius Network, has sought bankruptcy protection in the US. The company said, “Customer claims will be addressed through the Chapter 11 process.” Two other crypto companies recently filed for bankruptcy protection. Voyager Digital and Three Arrows Capital (3AC).
Celsius follows Voyager in filing for Chapter 11 bankruptcy
Crypto lender Celsius Network announced Wednesday that it “filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York.”
Alex Masinski, CEO and co-founder of Celsius, commented:
This is the right decision for our community and our company.
The company stated that the purpose of the bankruptcy filing is to “provide the company with an opportunity to complete a comprehensive restructuring transaction that stabilizes the business and maximizes value for all stakeholders.”
Referring to continuing operations, the company explained, “We are committed to continuing our business.” Celsior has $167 million on hand, which will provide sufficient liquidity to support certain operations during the restructuring process.”
Last month, Celsior suspended withdrawals, swaps, and transfers on its platform. Its decision to freeze accounts led the U.S. Securities and Exchange Commission (SEC) and several state regulators to investigate the company.
According to Wednesday’s announcement
Celsius has not requested authority to permit customer withdrawals at this time. Customer claims will be addressed through Chapter 11 proceedings.
State regulators believe Celsior is “deeply insolvent”
The Vermont Department of Financial Regulation is one of the state regulators investigating Celsior. Regulators alleged that the crypto firm engaged in unregistered securities offerings in several jurisdictions, including Vermont.
“Because it failed to register its interest accounts as securities, Celsius’s customers did not receive material disclosures regarding its financial condition, investment activities, risk factors, and ability to repay its obligations to depositors and other creditors,” the regulator detailed, and added.
The regulator believes that Celsius is insolvent and lacks the assets and liquidity to meet its obligations to account holders and other creditors.
Last week, crypto lender Voyager Digital also filed for Chapter 11 bankruptcy. The company cited “prolonged volatility and contagion in the crypto markets” and the default on a loan from crypto hedge fund Three Arrows Capital (3AC) as reasons for its decision to file for bankruptcy protection.
Days before Voyager’s bankruptcy filing, Three Arrows Capital filed for Chapter 15 bankruptcy protection in the United States, and this week a bankruptcy judge froze 3AC’s assets.
Image credits: Shutterstock, Pixabay, Wiki Commons
