Celsius Crypto Company Files Bankruptcy

celsius crypto company files bankruptcy

Celsius chapter 81m pharos sam – Crypto company Celsius has started the process of filing for bankruptcy protection section 11 after a month of chaos.

In a statement Wednesday, Celsius said it would seek to stabilize its business by restructuring it in a way that maximizes value for all stakeholders.

According to CNBC, Celsius said he had $167 million in cash to support the temporary operation.

Earlier, CNBC reported the company’s attorneys notified US state regulators late Wednesday, according to a source, who asked not to be named because the process is private.

“This is the right decision for our community and our company,” Celsius co-founder and CEO Alex Mashinsky said in a statement .

“I am sure that when we look back at the history of Celsius, we will see this as a defining moment, where acting with determination and confidence serves the community and strengthens the future of the company,” he added.

The Hoboken, New Jersey-based company made headlines a month ago after freezing customer accounts, blaming extreme market conditions.

News on Wednesday marked the latest high-profile crypto bankruptcy as prices plummeted. Voyager filed for section 11 bankruptcy protection last week, after suffering losses from exposure to the now-defunct hedge fund Three Arrows Capital.

Celsius at a glance

Celsius Crypto Company Files Bankruptcy

A judge in a New York bankruptcy court froze the remaining assets of Three Arrows Capital this week. The fund is currently in the process of liquidation.

“Unfortunately, this was to be expected. It was anticipated. However, that has not stopped our investigation. We will continue to investigate the company and work to protect its clients, even through its bankruptcy,” Joseph Rotunda, director of enforcement at the Texas State Securities Board, said of the bankruptcy filing. Celsius.

Celsius did not immediately respond to CNBC’s request for comment.

The company has more than 100,000 lenders, which can include customers and loan partners, according to bankruptcy documents. Its largest unsecured claim was USD 81 million or Rp 1.2 trillion from the Caymans Island-based Pharos Fund.

The filing also lists billionaire trading company FTX CEO Sam Bankman-Fried, Alameda Research, as a creditor with an unsecured loan of USD 12 million or Rp 180 billion.

Celsius is one of the biggest players in the crypto lending space with over USD 8 billion in loans to clients, and nearly USD 12 billion in assets under management as of May. Celsius said it had 1.7 million subscribers as of June and competes with interest-bearing accounts and yields as high as 17 percent.

Sued by Former Investment Manager

Celsius Crypto Company Files Bankruptcy

The company will lend customers’ crypto to counterparties who are willing to pay sky-high interest rates to borrow them. Celsius will then share a portion of that revenue with users. However, that structure collapsed amid a liquidity crisis in the industry.

The company was sued last week by a former investment manager who accused Celsius of failing to hedge risk, artificially inflating the price of its own digital coin, and engaging in activities that constituted fraud.

Six state regulators have launched investigations into Celsius. Vermont became the latest to do so early on Wednesday. The state Treasury Department said Celsius spreads customer assets in a variety of risky and illiquid investment, trading, and lending activities.

“Celestial customers do not receive critical disclosures about their financial condition, investment activities, risk factors, and ability to repay obligations to depositors and other creditors. The company’s assets and investments may not be sufficient to cover its outstanding obligations,” Vermont regulator said in a statement. .

Celsius Crypto Company Pays $300 million of Debt

Celsius Crypto Company Files Bankruptcy

Previously, crypto firm Celsius began paying USDC stablecoin debt worth around $78.1 million to lending platform Aave, according to tracking firm Etherscan. In addition, Celsius also paid USD 35 million worth of stablecoin DAI on the Compound platform.

Reporting from Yahoo Finance, Wednesday, July 13, 2022, amid the recent decline in cryptocurrency prices, Celsius has frozen withdrawals since June and recently started paying off its debts to free up collateral placed in decentralized finance applications.

On the other hand, another affected crypto company, Voyager Digital Ltd. and Three Arrows Capital, recently filed for bankruptcy. Since July 1, Celsius’s digital wallet has paid back more than $300 million in debt to various platforms, including Maker, according to data from Nansen and Etherscan.

Celsius still has about $120 million in debt in Aave and Compound, according to the Zapper tracker. On this decentralized lending platform, collateral is automatically liquidated under certain circumstances unless it is repaid.

Celsius’s source of funding to repay the loan remains unclear. The company also did not respond to a request for comment. Celsius used to promise people who gave their digital coins more than 18 percent interest on their holdings.

The distressed lender has provided limited guidance since halting drawdowns on June 12. As of June 30, the company said it was exploring options such as strategic transactions as well as debt restructuring.

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