Celsius Network, the cryptocurrency platform facing a severe liquidity crisis, has filed for Chapter 11 bankruptcy. The bankruptcy petition was filed in the U.S. Bankruptcy Court for the Southern District of New York, the company itself reported yesterday.
“Today’s bankruptcy filing follows Celsius’ difficult but necessary decision last month to stop withdrawals, exchanges and transfers on its platform in order to stabilize its business and protect its customers. Without the halt in operations, the certain acceleration of withdrawals would have allowed some customers – those who first submitted a withdrawal request – to be paid in full, while others would have been left behind waiting for Celsius to collect value from illiquid or longer-term asset development activities so they too could be paid,” Celsius’ statement said.
“The right decision,” says Mashinsky
“This is the right decision for our community and our company,” said Alex Mashinsky, co-founder and CEO of Celsius, adding: “We have a strong and experienced team to lead Celsius through this process. I am confident that when we look back in history at some point, we will see this decision as a defining moment in which decisive and confident action served the community and strengthened the future of the company.”
Celsius is one of the cryptocurrency lenders facing financial problems after the latest liquidity crisis in the cryptocurrency industry. It has suspended withdrawals on its platform since June 12, cut jobs and hired restructuring experts to advise it on how to manage this crisis.
Calls for normal operation, no withdrawals
The company notes that it has $167 million in cash, enough to “support certain activities during the restructuring process.” Celsius has filed motions with the court to allow it to continue operating normally so it can pay employees and continue to offer benefits. However, Celsius is not asking the authorities to allow customer withdrawals at this time, he noted. Instead, customer claims will be addressed through the Chapter 11 process.
Kirkland & Ellis LLP is serving as legal counsel, Centerview Partners as financial advisor and Alvarez & Marsal as restructuring advisor for Celsius.