Celsius Network becomes the latest victim of the cryptocurrency crash following a dramatic plunge in token prices.
On Wednesday, the American crypto lender said it had filed for bankruptcy in New York.
Celsius froze withdrawals last month, citing ‘extreme’ market conditions, cutting off access to savings for individual investors and sending tremors through the crypto market.
The five-year-old company estimated its assets and liabilities as between $1 billion to $10 billion, with more than 100,000 creditors. The company has $167 million in cash on hand.
‘This is the right decision for our community and company,’ said Celsius co-founder and Chief Executive Alex Mashinsky.
On the Reddit thread for Celsius, some people had still been hopeful that the pause on withdrawals was temporary. The bankruptcy filing has burst that bubble and the group has since been updated with suicide hotlines.
‘I had all of my savings I’ve been building for 20 years in Celsius. I don’t know what to do. I have my 2nd child on the way and a mortgage to pay for […] My wife has no idea,’ wrote one Reddit user.
Crypto lenders such as Celsius boomed during the Covid-19 pandemic, drawing depositors with high interest rates and easy access to loans rarely offered by traditional banks. They lent out tokens to mostly institutional investors, making a profit from the difference.
But it all came crashing down after a sharp sell-off in the crypto market spurred by the collapse of major tokens TerraUSD and Luna in May.
Celsius is not the first crypto lender with this fate. Another US crypto lender, Voyager Digital, filed for bankruptcy this month after suspending withdrawals and deposits. Singapore’s Vauld, a smaller lender, also froze withdrawals this month.
The company said in a statement that it was not requesting authority to allow customer withdrawals, adding it had asked the court to allow it to continue operations such as paying employees.
When Celsius froze withdrawals, it triggered a slide across cryptocurrencies, with the total market value dropping below $1 trillion for the first time since January 2021.
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