The crypto loan Celsius reports bankruptcy in New York

Celsius Network, one of the world's largest lenders for cryptocurrencies, has filed for bankruptcy because a wave of companies for digital assets frozen assets and then made a restructuring in the middle of a strong sale of cryptocurrencies.

The bankruptcy application of the in Hoboken, New Jersey, based company according to Chapter 11 at a New York court, takes place about a month after Celsius frozen his customer assets and caught billions from dollars to more than one million accounts.

The court file lists between $ 1 and $ 10 billion of assets, the same sum of liabilities and more than 100,000 creditors.

Since cryptocurrencies lost value in 2022, lenders who offer high -interest cryptocurrency loans were faced with liquidity bottlenecks and customer returns, which put them on a shaky financial basis. Some reacted by blocking customer withdrawals, collecting money at necessary prices or initiating restructuring procedures.

Celsius said that his submission was an "opportunity to stabilize his business" and to go through a restructuring "which maximizes the value for everyone involved".

"Today's application is followed by Celsius' difficult but necessary decision last month, withdrawing withdrawals, exchange processes and transfers on its platform in order to stabilize his business and protect its customers," said a special committee of the Celsius board in a press release.

If Celsius had not restricted the withdrawals if it had effectively experienced a rush to its deposits. Customers who had initially withdrawn their assets would have been paid for what others would have left behind with illiquids and less secure demands, the company said.

"This is the right decision for our community and our company," said Celsius boss Alex Mashinsky in the press release.

lenders like Celsius accepted customer deposits and gave the funds to higher interest rates, benefiting from the difference. In order to attract investors, Celsius offered high interest rates and claimed that his risks were low. As the FT reported in an investigation, however, Celsius has been increased financial risks in recent months, since the demand for loans from institutional investors declined.

other large digital lenders experienced a similar fate in the middle of a strong sale of cryptocurrencies and the implosion of a heavily caught cryptocurrency hedge fund, Three Arrows Capital, which registered bankruptcy at the end of June.

At the beginning of this month, the crypto loan Voyager digital bankruptcy also reported. Some companies narrowly averted a similar fate by accepting emergency money at sales prices.

Blockfi agreed on July 1, a rescue agreement with the crypto trade exchange FTX, which rated the lender with up to $ 240 million, well below an earlier evaluation of $ 4 billion.

The failure of Celsius is similar in a similar way to burden risk capital providers with great losses. At the end of 2021 it collected $ 750 million from West Cap and the Pension Fund Caisse de Dépôt et Placement du Québec based in Quebec with an evaluation of over 3 billion USD

Kirkland & Ellis acts as a legal advisor of Celsius, while Centerview is Partners his financial advisor.

Alvarez & Marsal, a consulting company that is particularly known for the processing of the failed investment bank Lehman Brothers after the financial crisis of 2008, is Celsiuss restructuring consultant.