Crypto lender files for bankruptcy protection
Following a month of chaos, the Crypto company Celsius has filed for Chapter 11 bankruptcy protection. In a statement on July 13, 2022, Celsius assured that they had $167 million in cash to support operations while they try to restructure the company to maximize value for stakeholders. Celsius had frozen all customer accounts amid extreme market volatility last month.
Alex Mashinky, co-founder and CEO of the Hoboken, New Jersey-based company, has expressed resolve to turn a new leaf and emerge from this challenge even stronger as a company in his statement on Wednesday. This comes just a week after Voyager filed for Chapter 11 bankruptcy.
Celsius owes money to more than 100,000 customers and ending counterparties. The largest of this claim, worth $81 million, is from Caymans Island-based Pharos Fund. Celsius had $12 billion in assets under management and had loaned $8 billion to clients. Their client base had swollen to 1.7 million as of May. Celsius’ high interest-based model crashed as customers began liquifying their crypto.
According to state legislators, Celsius had invested in high risk investments without hedging that risk or providing disclosure to customers. They admitted that the company’s assets are insufficient to cover losses incurred by customers who may have to wait for years to see their money returned.