Cryptocurrency lender Celsius files for bankruptcy as customers fear for their money

midian182

Posts: 8,318   +103
Staff member
What just happened? The Celsius Network, one of the largest cryptocurrency lenders, has filed for chapter 11 bankruptcy a month after it suspended all withdrawals, swaps, and transfers between its 1.7 million customers' accounts due to "extreme market conditions." The latest event has left a question mark over whether users will ever be able to access the money they have tied up in the platform.

The Celsius Network was one of the first big casualties of the crypto crash following the collapse of TerraUSD. The decentralized finance (DeFi) platform, which operated by collecting customer deposits that it loaned out to others to earn a return, froze account withdrawals and transfers last month due to "extreme market conditions." Celsius said customers would "accrue rewards" during the pause, though receiving any interest on the held crypto seems like wishful thinking right now.

In the announcement that it had filed for chapter 11 bankruptcy protection, members of the Special Committee of the Board of Directors said: "Today's filing follows the difficult but necessary decision by Celsius last month to pause withdrawals, swaps, and transfers on its platform to stabilize its business and protect its customers."

"Without a pause, the acceleration of withdrawals would have allowed certain customers—those 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 asset deployment activities before they receive a recovery."

Celsius has 100,000 creditors, which could include customers alongside businesses. Its largest unsecured claim is an $81 million from Caymans Island-based Pharos Fund, reports CNBC, and it owes a $12 million unsecured loan to Alameda Research.

The company says it has $167 million cash on hand to provide liquidity to support certain operations during the restructuring process, while its estimated assets and liabilities are listed between $1 billion and $10 billion on a consolidated basis. It is not requesting authority to allow customer withdrawals at this time.

The concern for customers is that they might not get their money back due to the bankruptcy. Celsius' terms and conditions state insolvency proceedings could result in the "total loss of any and all Digital Assets," though the company is looking at restructuring rather than liquidation right now.

CEO Alex Mashinsky said, "We will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company." It's hard to imagine that the many customers who handed their life savings over to Celsius will agree with that statement.

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emmzo

Posts: 763   +1,177
Pyramids on top of pyramids are starting to fall. Meanwhile, Hodlers and moonboys are keeping their butt cheeks clenched, hoping for a miracle. Fckin bots still keep Bitcorn price around 20k. But the rekt is incoming, you can't stop reality.
 

defaultluser

Posts: 509   +389
Without these layers upon layers of protection , Bitcoin would never r have doubled it's previous highs. But, I think it's going to be a lot harder to convince folks to rebuild these layers anytime soon ( and if they do, it's going to take a decade to rebuild trust from a;ll the users who just lost all their money.)
 

PEnnn

Posts: 946   +1,229
You mean the house of cards and it's ponzi schemes have collapsed???? Who could have predicted that!!

Where are the peddlers, even here on TS, who kept preaching that Bitcoin krap is safer than real money or even gold!!
 

terzaerian

Posts: 1,517   +2,259
Celsius was basically traditional finance larping as DeFi, playing traditional finance games, and winning traditional finance prizes. Protocols like Maker have been rocked by the markets lately but have remained stable because they are actually DeFi. Not that this means anything to the slack-jaws and hooting chimps ITT.
 

BigRedPDX

Posts: 302   +210
I pulled all my assets at the height of the frenzy. Once I started seeing huge drops I breathed a sigh of relief. This market is done for.
 

umbala

Posts: 778   +1,527
"Its largest unsecured claim is an $81 million from Caymans Island-based Pharos Fund"

Glad to see scumbags and criminals are still using Cayman Island shell corporations to hide their money. Sad part is, whoever lost that $81 million probably won't lose much sleep over it, most likely didn't even make a big dent in their bank account.
 

Watzupken

Posts: 696   +585
Without these layers upon layers of protection , Bitcoin would never r have doubled it's previous highs. But, I think it's going to be a lot harder to convince folks to rebuild these layers anytime soon ( and if they do, it's going to take a decade to rebuild trust from a;ll the users who just lost all their money.)
I don’t think so. People are very forgetful when there is potential for “high return”. The last crypto bust had a lot of people badly burned. But look what happened again now? It’s worst, but people betting on crypto to make handsome profit will come back again when they see prices increasing. Some may start off conservatively, but if they make money, they will be back in full force.