Crypto Lender Celsius Files for Bankruptcy After Cash Crunch
Cryptocurrency lender Celsius Network filed for Chapter 11 bankruptcy, the latest casualty of a $2 trillion crash that has wiped out some of the industry’s biggest names and exposed hundreds of thousands of individual investors to steep losses.
Celsius, which has more than 100,000 creditors, said it took the step to stabilize its business and work out a restructuring for all stakeholders. The filing was done in the Southern District of New York.
The company, one of the largest cryptocurrency lenders, had amassed more than $20 billion in assets by offering interest rates as high as 18% to depositors before it halted all withdrawals in June amid a panic run by clients. In its latest statement, Celsius said it has both estimated assets and liabilities anywhere between $1 billion to $10 billion.
Celsius’ troubles are emblematic of the problems plaguing the digital asset space, where rising US interest rates have sent investors fleeing and triggered the collapse of lenders and hedge funds. Crypto broker Voyager Digital Ltd. filed for Chapter 11 bankruptcy protection this month while liquidators have been called in for bankrupt crypto hedge fund Three Arrows Capital.
Doubts about the sky-high yields backing products such as those Celsius offers have intensified after Terra’s collapse in May. Another centralized lender Babel has also halted withdrawals and crypto prices have slumped, with Bitcoin and Ether losing half their value since end-December.
For Celsius, its business was built on loaning crypto borrowed from its customers to institutional investors. It was also a participant in a slew of decentralized-finance applications.
In a statement Wednesday, Celsius said it needed to halt withdrawals as without it, an
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