- CeFi firm Celsius has filed for bankruptcy under Chapter 11 provision
- The company currently has $167 million in cash on hand, which should provide “ample liquidity during the restructuring process
- The news comes roughly a month after the company responded to the acceleration of outflows by halting withdrawals
The bankruptcy filing comes a month after Celsius freezer withdrawals due to liquidity problems
Liqduity-strapped cryptocurrency lender Celsius has filed for bankruptcy under Chapter 11 with the New York-based Bankruptcy Court. According to the press release published on Wednesday, the company is seeking to restructure and stabilize its business operations to maximize value for all stakeholders. Celsius has between $1 billion and $10 billion in assets, accordion to the filing.
The Celsius team shared the news with the broader community on Twitter;
The news comes roughly a month after the company initially paused withdrawals to protect itself against outsized outflows sparked by the cryptocurrency downturn and the Terra ecosystem collapse.
“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,” Members of the Special Committee of the Board of Directors said in a joint statement. “Without a pause, the acceleration of withdrawals would have allowed certain customers … to be paid in full while leaving others behind,” the Board added.
Celsius paid off a substantial amount of debt in recent weeks to a number of DeFi lending and borrowing protocols, including $41 million worth of DAI to Maker and $20 million worth of USDC to Aave. By repaying a part of its debt, Celsius was able to unlock as much as $440 million worth of WBTC it used as collateral when borrowing DAI.
Earlier this week, Celsius hired Kirkland & Ellis LLP as its new legal counsel, which led many to believe that the company’s bankruptcy filing is imminent. The Chicago-based law firm is also providing its legal services to Voyager Digital, a cryptocurrency trading platform that filed for bankruptcy last week.
According to the press release, Celsius is currently in possession of $167 million in cash on hand, which should provide “ample liquidity” during the company’s restructuring.
The platform’s native CEL token lost over 10% on the news of the bankruptcy filing and is currently changing hands at $0.8195, almost 90% removed from its all-time high of $8.01 it reached last June.