Several weeks into the crisis, Celsius, one of the largest crypto-lending platforms, has just declared bankruptcy. Several billion dollars are at stake, but the founders believe they have avoided the worst.
The drop in cryptocurrency prices has caused a new victim: the percentage degree. The lending platform declared bankruptcy in the United States on July 13, in a press release. ” This is the right decision for our community and our business. “The limiting factor in this is Alex Mashinsky, co-founder and leader of Celsius.” We have a strong and experienced team to guide us through this process “.
It’s a Crypto Bomb: Celsius is one of the largest cryptocurrency lending platforms, handling the assets of a large number of individuals. But the announcement of Celsius’ bankruptcy has not yet been a death knell for her. US law already regulates bankruptcies in a very precise manner, and in the case of Centennial, which indicated that it follows a procedure known as “Chapter 11″, it is in fact a transaction” Restructuring However, this is not good news, even if the worst is avoided.
What happens now to the degree?
Chapter 11 Bankruptcy Procedures Special Legal Procedures. It is the companies that require it, and the law places them under the protection of the court as they restructure and clean up their accounts. This allows them to remain in control, and in general to continue part of their activity, with the consent of the judges.
In the case of Celsius, the directors note that they requested the court to be able to continue certain operations, in order to ” Guarantee of normal operation And so Celsius asked the judges to be able to pay her employees, and that was approved. However, Celsius did not ask permission to allow withdrawals again, so clients’ funds are still blocked.
In the press release, Celsius supports its decision to freeze withdrawals last month. ” Without this pause, withdrawals would have increased, and would have allowed some of the faster-acting customers to walk away with all their money. Without necessarily leaving much to others. Therefore, in order to avoid a massive withdrawal scenario, such as what the Terra ecosystem experienced during its collapse, Celsius continues to block funds.
The document announcing Celsius’ bankruptcy, available online and seen by The Verge, states that Celsius is currently managing “ Between 1 and 10 billion dollars In assets, but the platform owes the same level. Celsius also explained in its press release that it has ” $167 million in cash “Amount at his disposal” It will be more than enough to support certain operations during the restructuring process “.
Percentage problems aren’t new: It started just a month ago, when the platform announced to everyone’s astonishment that it was freezing raffles. centigrade at that time.” harsh conditions To justify the termination of operations, referring to the sharp and prolonged decline in cryptocurrency prices. However, Celsius is one of the largest cryptocurrency lending platforms, having valued over $3 billion last year, and managing more than $24 billion in assets at its peak. Thus, the news of the withdrawal freeze caused some consternation in the community.
Celsius isn’t the only giant in trouble: investment fund 3 Arrows Capital declared bankruptcy at the beginning of July – but under more restrictive conditions. The company, which managed several billion dollars in assets, worked with many professionals and individuals, who could lose significant sums.