Aditya Hadi Pratama · · 2 min readCelsius files for bankruptcy, continues pause in withdrawals
Celsius, a New Jersey-based crypto lender, has filed for reorganization under chapter 11 in the US bankruptcy court. If approved, it will give the firm time to restructure its financial responsibilities to its users.
Celcius CEO Alex Mashinsky on stage during the Web Summit 2021 at the Altice Arena in Lisbon, Portugal / Photo Credit: Piaras Ó Mídheach
The company said that it currently has US$167 million in cash on hand to support operations during the process. It also requested the court’s approval to allow it to continue paying its employees and issuing their benefits.
In June, Celsius halted withdrawals, swaps, and transfers on its platform. However, in its chapter 11 proposal, it didn’t ask for approval to allow customer withdrawals. Instead, the firm promised to address that through the reorganization process.
In a statement, the company said that if it had not paused withdrawals, this would have allowed certain customers who were first to act to be paid in full, while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term assets.
However, some people worried that the proposal for chapter 11 may result in customer deposits being paid back last, if at all. The price of Celsius’ token, Cel, also dropped by about half after the company announced the filing.
See also: Terra, Celsius raise prospects for crypto insurance
Editing by Miguel Cordon and Jaclyn Tiu
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