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Celsius promoted itself as better than a bank. Now the crypto company is declaring bankruptcy.

Celsius Network archived for bankruptcy protection on Wednesday after a “crypto winter” (or crash) that decimated the value of digital currencies including bitcoin and ethereum. The company said most accounts will remain “on hold until further notice.”

Celsius is the third crypto-related company to file for bankruptcy in two weeks. Follow Capital of the three arrows and lender digital traveler in seeking financial restructuring after digital currencies fell in value. Celsius marketed itself as a type of crypto bank, encouraging people to deposit their digital currencies with the company and then earn money by borrowing or lending against crypto deposits.

The problems for Celsius customers began when the network trade stopped and other activities last month amid the cryptocurrency crash, effectively blocking customers’ access to their funds. The decision shocked customers who had been told by Celsius that the platform was safe and low-risk, while also providing profits of up to 17%. In his sales pitch, Celsius fiance “Your interests are our top priority” and stressed that traditional banking “is broken.”

After filing for Chapter 11 bankruptcy protection on Wednesday, Celsius said that most account activity “will be paused until further notice.”

It added: “Withdrawals, exchanges, and transfers between accounts will remain paused, and rewards will stop accruing as of the filing date. Celsius is not requesting authority to allow customer withdrawals at this time.”

In other words, customers still can’t access their funds, and it’s unclear if Celsius depositors will get their money back or which customers will get their money back first. Cryptocurrency lenders are not regulated like banks, so there is no deposit insurance.

“Now I could be homeless”

The company’s terms of service warn that if Celsius files for bankruptcy, the treatment of customers’ digital assets is “unstable, not guaranteed, and may lead to a range of outcomes that are impossible to reliably predict.” .

“We’ll never get our money back huh,” one Twitter user wrote in response to a Celsius tweet announcing the bankruptcy filing. Another Twitter user responded: “I deposited my cryptocurrency and took out an emergency loan literally MONTHS ago. An emergency… now I could be homeless. Thanks Celsius.”

in a statementCelsius said the trading halt was necessary because without it, “accelerating withdrawals would have allowed certain customers, those who were first to act, to receive full payment while others stayed behind to wait for Celsius to collect value.” of illiquid or longer”. long-term asset deployment activities before they receive a recovery.

restructuring plan

In filing for bankruptcy, Celsius said it “intends[s] to come up with a plan to restore activity across the platform, return value to customers and provide choice.”

The company has $167 million in cash on hand, which it said is enough to pay for “certain operations” as it restructures. His first goal is to receive court approval to continue paying employees and providing their benefits without interruption, he added.

The bankruptcy filing lists the company’s 50 largest creditors, the largest being Pharos USD Fund, a crypto fund, with $81 million in unsecured claims. Other creditors include cryptocurrency trading group Alameda Research LTD and crypto brokerage Covario AG.

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