The cryptocurrency slide is bringing the next crypto bank to its knees, following the record loss of Bitcoin and Co. Bank and lender Celsius Network is broke and filed for Chapter 11 bankruptcy.
Celsius Network seeks reorganization through Chapter 11 bankruptcy
Celsius Network, known as a crypto bank and lender, has filed for what is known as Chapter 11 bankruptcy in New York, according to Reuters news agency. The Chapter 11 bankruptcy provides for maximizing value for all shareholders, reorganizing the company from the ground up, and thus being able to continue business operations in a restructured manner. Whether this will succeed, however, is currently still written in the stars.
The same fate had befallen the crypto broker Voyager Digital just a few days ago, which had run into difficulties due to debts with the crypto hedge fund Three Arrows Capital (3AC), which was also insolvent.
So last Wednesday, July 13, the New Jersey-based Celsius Network, which specialized in crypto deposit loans, was also hit. Already last month, the company had to freeze the deposits of all its customers (about 1.7 million in number) due to the “extreme market situation”.
Can Celsius continue to exist?
According to the company, the Celsius Network holds assets and liabilities worth “between $1 billion and $10 billion”and has $167 million in cash. According to the report, the company has filed all required documents with the court to maintain operations under the Chapter 11 bankruptcy.
Celsius’ approximately 150 employees (as of 2021) are also apparently expected to remain employed. “This is the right decision for our community and our company,” CEO Alex Mashinsky, who co-founded the Celsius Network in 2017, is quoted as saying.
The crypto boom, which had gained decent momentum during the COVID-19 pandemic, has been reversing more and more in recent months, bringing more and more crypto finance companies to their knees.
Most notably, the insolvency of crypto hedge fund Three Arrows Capital (3AC) continues to draw enormous circles. There is still no trace of the two founders, Kyle Davies and Su Zhu. The global manhunt has so far been unsuccessful.
Investigating authorities and insolvency administrators fear that the duo has absconded with the assets. Zhu spoke out a few days ago via Twitter and published two emails from his lawyer, writing: “Unfortunately, our good will to cooperate with the liquidators was met with agitation.”