- Celsius has filed for Chapter 11 bankruptcy
- The lending platform halted customer withdrawals a month ago
- Celsius has only $167 million in cash
Celsius, one of the posterchildren of the crypto contagion that has plagued the space in recent months, has filed for Chapter 11 bankruptcy. The lending platform, which first hit troubled waters a month ago, made the announcement late on Wednesday, stating that it wanted to “emerge from Chapter 11 positioned for success in the crypto industry.” The company had looked to be in better shape having paid back hundreds of millions of dollars in loans, but it seems that income was not enough to stave off the inevitable. Creditors will now face a battle to recover the funds they had on the platform, although many will have believed their chances to be long gone anyway.
Moments ago, @CelsiusNetwork filed voluntary petitions for Chapter 11 protection and announced that the company initiated a financial restructuring. https://t.co/vf5wsT6TMp
— Celsius (@CelsiusNetwork) July 14, 2022
Bankruptcy is “Defining Moment” Says Mashinksy
Celsius combined a press release with a Twitter thread last night to announce the news, saying in the press release that it was taking the opportunity to “stabilize” its business and “consummate a comprehensive restructuring transaction that maximizes value for all stakeholders.”
Alex Mashinsky, the Celsius co-founder and CEO who has been heavily criticised for his dismissive attitude in the lead up to Celsius’ issues, said that he was confident the company would emerge stronger:
This is the right decision for our community and company. We have a strong and experienced team in place to lead Celsius through this process. I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company.”
Celsius Has Only $167 Million Left
Celsius added that it had $167 million in cash reserves, which, while it may be enough to continue operating, is a drop in the ocean of what it should have and what it needs to have in order to pay out creditors. The act of filing for bankruptcy could also mean that Celsius customers are the last to be considered when it comes to the order in which the remaining money is doled out, with other creditors potentially sitting higher in the pecking order.
Celsius’ bankruptcy comes a month after it paused customer withdrawals and less than a week after it freed up $440 million in capital after having paid back a Maker loan, an amount that was clearly not enough to fend off the closure of the platform.
