Celsius, the cryptocurrency investment platform, announced that it has filed for bankruptcy in the US on Wednesday. The company had frozen crypto transactions last month and had appointed a team of lawyers in hopes to recover financially. However, the company has faltered and is shutting down amidst the already unstable industry. Celsius’ bankruptcy will add more fire to the ongoing crypto winter.
Celsius was one of the most successful crypto investment platforms to have ever existed. The company had amassed a massive $20 billion in assets. They would offer interest rates as high as 18% to customers who deposited their cryptos.
But, the company stopped all transactions in mid-June this year, including withdrawals. The official reason being given at the time was “extreme market conditions.”
The American law allows companies that are unable to pay their debts to restructure away from their creditors while being able to continue their current operations. Celsius announced in its statement that the company will restructure in a way to maximize value for its stakeholders. The company has $167 million ready to meet urgent needs meanwhile. The company described the move as a “difficult but necessary decision” in its Wednesday statement.
Celsius is not the only platform to have been met with such a fate. The crypto winter and the rising interest rates the Federal Reserve has started asking from crypto exchanges have hurt investment sentiments. The recent moves from the Federal Reserve are squeezing funding costs. Other platforms that succumbed to these conditions include the broker Voyage Digital Ltd., which filed for Chapter 11 bankruptcy protection. Another hedge fund named Three Arrows Capital went bankrupt. Companies like Babel Finance and CoinFlex have suspended withdrawals owing to a lack of cash.
Alex Mashinsky, co-founder and CEO of Celsius commented, “This is the right decision for our community and company. I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company.”