After dealing with an entire month of turmoil and uncertainty, crypto lender Celsius Network has finally decided to file for Chapter 11 bankruptcy.
A statement from Celsius was issued on Wednesday in which the crypto lender clarified that it would focus on restructuring its business in a manner that all stakeholders could enjoy maximum value. The company said that its cash in hand was about $167 million and it would use it for supporting its operations during this difficult time.
Earlier reports had indicated that lawyers of the company were notifying state regulators in the United States individually as of Wednesday evening. However, the sources that disclosed this information did not want to be named.
The chief executive and co-founder of Celsius Network, Alex Mashinsky said in a statement that it was the best decision they could have taken for the company and the community. He added that he was sure that when they look back at the company’s history in the future, it would be regarded as a defining moment. He added that they were acting with confidence and resolve in order to serve their community and for strengthening their business.
The problems for Celsius Network had begun almost a month ago when it made headlines because of its announcement to hit a pause on deposits and withdrawals on its platform because of the tough market conditions.
The news on Wednesday marks the latest bankruptcy to occur in the crypto market in light of the plunging prices. Last week, Voyager Digital filed for Chapter 11 bankruptcy, after it suffered losses because of its exposure to defunct crypto hedge fund 3AC.
Three Arrows Capital had also filed for bankruptcy, as the hedge fund had been struggling with liquidity because of the collapse of the UST and LUNA tokens back in May. A New York judge issued the order of freezing the company’s assets this week because its founders have gone into hiding. The liquidation process for the hedge fund has already begun.
Texas State Securities Board’s director of enforcement, Joseph Rotunda said that this had been expected where Celsius Network is concerned. He said that they would not stop their investigations because of its announcement and would continue to protect people, even during the insolvency process.
There are more than 100,000 creditors of the crypto lender, which include leading counterparties as well as its clients. This is detailed in the bankruptcy document. The largest unsecured claim that the company has is from Pharos Fund in the Cayman Islands, which is worth $81 million.
The filing also mentions Alameda Research, the trading company of the CEO of the FTX exchange, Sam Bankman-Fried. The company is a creditor that has an unsecured loan worth $12 million. As of May, Celsius had been one of the largest players in the world of crypto lending.
Its total assets under management had been $12 billion and loans to clients were about $8 billion. As of June, its total customers were 1.7 million, and was offering a yield as high as 17%.