A month later suddenly suspend withdrawals on its platform, Celsius Network announced on Wednesday that it had filed for bankruptcy in New York.
According to a filing with the United States Bankruptcy Court for the Southern District of New York, the Hoboken-based crypto firm listed assets and liabilities between $1 billion and $10 billion, with more than 100,000 creditors, while keeping $167 million in cash on hand.
The announcement punctuates a dramatic downfall for the crypto lender, whose business model has been stretched and strained amid a broader industry meltdown. NJBIZ documented Celsius’ situation in a story last month.
“This is the right decision for our community and our business,” said Alex Mashinsky, co-founder and CEO of Celsius. “We have a strong and experienced team in place to guide Celsius through this process. I am confident that when we look back on the history of Celsius, we will see this as a defining moment, where acting with determination and confidence served the community and strengthened the future of the company.
Following a withdrawal freeze in June, Mashinsky, a charismatic leader with a huge social media footprint, has come under fire from devout fans and customers, whose accounts have been frozen, after becoming uncharacteristically and cryptically silent.
The company says it believes the Chapter 11 proceeding will provide Celsius “the opportunity to stabilize its business and complete a comprehensive restructuring transaction that maximizes value for all stakeholders.”
“Today’s filing follows Celsius’ difficult but necessary decision last month to suspend withdrawals, trades and transfers on its platform to stabilize its business and protect its customers,” the committee members said. board meeting in a press release. “Without a pause, the acceleration of withdrawals would have allowed some customers – those who were the first to act – to be paid in full while leaving others to wait for Celsius to recoup the value of asset deployment activities. illiquid or longer term before receiving a trade-in.”
Celsius is not seeking approval to allow customer withdrawals at this time, which means customers will be forced to deal with their frozen accounts through the Chapter 11 process. However, the company believes its available cash provides sufficient cash to support operations and files a “first day” motion to ask to pay employees and maintain their benefits without interruption throughout the restructuring process.
Kirkland & Ellis LLP is acting as legal counsel. Centerview Partners is the financial advisor and Alvarez & Marsal is the restructuring advisor to Celsius.