As temperatures rise around the world, it seems like Celsius is on the way down. The crypto lender has announced that it has filed for bankruptcy. It is the latest victim of the crypto winter which has decimated the industry. Crypto lending has tumbled in recent months following a crash in cryptocurrency prices and the collapse of the major token TerraUSD in May.
Celsius Networks' decision to file for Chapter 11 follows on from its decision to pause withdrawals and transfers between accounts last month, blaming extreme market conditions. State securities regulators in New Jersey, Texas and Washington had stepped in to investigate the crypto lender’s decision. New Jersey-based Celsius listed estimated assets and liabilities on a consolidated basis in the range of $1 billion to $10 billion, according to a court filing in the US Bankruptcy Court for Southern District of New York. The US company said it had $167m cash on hand to provide liquidity to support specific operations during the restructuring process.
Just last month Celsius was slamming its critics and claiming optimism about its future shortly before it suspended withdrawals. Users have now been left wondering if they'll see their money again with many expected to get in line and claim via the Chapter 11 process.
Why it matters
Crypto lenders boomed during the COVID-19 pandemic, drawing depositors with high-interest rates and easy access to loans rarely offered by traditional banks. They, however, tumbled in the recent months following a crash in cryptocurrency prices. This was naturally compounded by the ongoing global financial downturn which has seen many tokens wiped out or their valuations completely tanked.
