The Celsius platform declares bankruptcy, another victim of the fall of cryptocurrencies

After several weeks of crisis, Celsius, one of the largest cryptocurrency lending platforms, has just filed for bankruptcy. Several billion dollars are at stake, but the founders believe they have avoided the worst.

The drop in cryptocurrency prices has made a new victim: Celsius. The lending platform filed for bankruptcy in the United States on July 13, in a press release. ” This is the right decision for our community and our business. “, Specified in this Alex Mashinsky, the co-founder and leader of Celsius. ” We have a strong and experienced team in place to guide us through this process “.

It’s a crypto bomb: Celsius is one of the largest crypto lending platforms and manages the assets of a huge number of individuals. But Celsius’ filing for bankruptcy is not yet the death knell. In fact, American law regulates bankruptcies very precisely, and in the case of Celsius, which indicated to follow a procedure known as “chapter 11″, it is in fact a transaction of ” renovation However, this is not good news, even if the worst may have been averted.

The price of cryptocurrencies is still falling sharply // Source: Maxim Hopman / Unsplash

What happens now for Celsius?

Chapter 11 bankruptcy procedures are special legal procedures. Companies ask for it and the law places them under the protection of a court as they restructure and rearrange their accounts. This allows them to maintain control and, in general, to continue part of their business, with the agreement of the judges.

In the case of Celsius, executives indicate that they have asked the court to be allowed to continue some operations, to ” ensure normal operation “. Celsius then asked the judges to be allowed to pay his employees, which was approved. Celsius, however, did not ask for permission to allow withdrawals again, so client funds are still frozen.

In the press release, Celsius supports his decision to block the withdrawal operations last month. ” Without this break the withdrawals would have increased, and would have allowed some customers, the fastest to act, to walk away with all their money. without necessarily leaving much to others. It is therefore to avoid this scenario of massive withdrawals, such as the one that the Earth ecosystem suffered during its collapse, that Celsius continues to block the funds.

The Celsius platform has filed for bankruptcy // Source: Nino Barney for Numerama

The document announcing Celsius’ filing for bankruptcy, available online and viewed by The Verge, states that Celsius is currently managing “ between 1 and 10 billion dollars in business, but that the platform is indebted at the same level. In his statement, Celsius also made it clear that he had ” $ 167 million in cash “At your disposal, a sum that” it will be more than enough to support some operations during the restructuring process “.

The woes of Celsius are not new: they started just a month ago when the platform announced to everyone’s surprise that it was freezing withdrawals. Celsius at the time quoted ” extreme conditions to justify the end of the operations, referring to the sharp and prolonged decline in the prices of cryptocurrencies. However, Celsius is one of the largest cryptocurrency lending platforms, valued at over $ 3 billion last year and managing over $ 24 billion in assets at its peak. The news of the blocking of the withdrawal had therefore caused some panic in the community.

Celsius isn’t the only giant with problems: 3 Arrows Capital investment fund also filed for bankruptcy in early July, but under much more restrictive terms. The company, which managed several billion dollars in assets, has worked with many professionals and individuals, who could lose large sums.

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