Celsius Network, one of the world’s largest cryptocurrency lenders, has filed for bankruptcy, as a wave of digital asset companies have frozen customer assets and entered restructuring amid a sharp sell-off in cryptocurrencies this year.
The Hoboken, New Jersey-based company’s Chapter 11 bankruptcy filing in a federal court in New York comes roughly a month after Celsius froze its customer assets, trapping billions of dollars across more than a million accounts.
The court filing listed between $1bn and $10bn in assets and the same amount in liabilities, and more than 100,000 creditors.
As cryptocurrencies have plunged in value in 2022, lenders offering high-yield cryptocurrency loans have faced cash crunches and customer redemptions, putting them on shaky financial footing. Some responded by blocking customer withdrawals, raising money at distressed prices or entering restructuring proceedings.
Celsius said its filing would be an “opportunity to stabilise its business” and undergo a restructuring “that maximises value for all stakeholders”.
“Today’s filing follows the difficult but necessary decision by Celsius last month to pause withdrawals, swaps, and transfers on its platform to stabilise its business and protect its customers,” said a special committee of Celsius’s board of directors in a press release.
Had Celsius not restricted withdrawals, it said it would have effectively undergone a run on its deposits. Customers who were first to withdraw their assets would have been paid in full, leaving others with illiquid and less certain claims, the company said.
“This is the right decision for our community and company,” said Alex Mashinsky, chief executive of Celsius, in the press release.
