Cryptocurrency lending company Celsius has declared Chapter 11 bankruptcy, according to court filings.
According to the Chapter 11 petition, the firm declared assets between $1 billion and $10 billion and stated that its estimated liabilities were also equal.
Cryptocurrency Company Celsius Reports Over 100,000 Creditors
Celsius declared in its petition that it has more than 100,000 creditors. The petition names Pharos USD Fund SP and Pharos Fund SP as its largest unsecured creditors with an unsecured claim of approximately $81 million. Other creditors named include ICB Solutions, The Caen Group LLC, Alameda Research, B2C2 and Covario AG.
Cryptocurrency firm Celsius said in a statement that it “has $167 million in cash on hand, which will provide sufficient liquidity to support certain operations during the restructuring process.”
According to the petition, the firm is represented by Kirkland & Ellis LLP. A total of eight organizations related to Celsius declare bankruptcy.
moments ago, @CelsiusNetwork filed voluntary petitions for Chapter 11 protection and announced that the company initiated a financial restructuring. https://t.co/vf5wsT6TMp
— Celsius (@CelsiusNetwork) July 14, 2022
What is Chapter 11 Bankruptcy?
Founded in 2017 by Alex Mashinsky and Daniel Leon, Celsius was offering individual investors attractive returns on crypto assets under the slogan “get yourself out of the bank”. Moving its headquarters from London to New Jersey last year, the company has grown to manage more than $10 billion in assets and has more than 1.7 million users.
Chapter 11 bankruptcy allows a company to continue operating while meeting its obligations to debtors. This is usually accomplished by proposing a restructuring plan that will be approved by creditors and overseen by a legal team.
The company is in trouble, bitcoin and was triggered by the downturn of the cryptocurrency market.
*Not investment advice.