Distressed Crypto Lending Firm Celsius and its mining unit have filed for Chapter 11 bankruptcy. The filing was filed Wednesday in the US Bankruptcy Court for the Southern District of New York.
According to the court file, Celsius reported estimated assets and liabilities consolidated in the $1 billion to $10 billion range. The filing will enable the company to stabilize its operations and complete a thorough restructuring agreement that optimizes value for all parties.
Members of the Special Committee of the Board of Directors said†
“Today’s filing follows Celsius’s difficult but necessary decision last month to pause withdrawals, swaps and transfers on its platform to stabilize its business and protect its customers. Without a pause, the acceleration of withdrawals would have allowed certain customers – those who acted first – to be paid in full, while others were left to wait for Celsius to harvest value from illiquid or long-term activation activities before making a recovery.”
The development comes moments after Celsius paid his debt to Compound, recovering $200 million in collateral. Last week the company too paid his debt to the Maker protocol. In addition, last Monday, the company repaid its Bitcoin loan and released $453 million in collateral.
CEO and co-founder Alex Mashinsky said:
“This is the right decision for our community and our business,”
With $167 million in cash, Celsius will have more than enough liquidity to sustain certain operations while the restructuring process is underway. In addition, the company has filed several typical motions in court to allow the company to continue with its normal course of business to achieve a seamless transition to Chapter 11.
Why did Celsius Mining file for bankruptcy?
The Celsius mining unit had filed a confidential S1 draft filing with the SEC in March 2022. Crypto mining stocks fell at the time and the ensuing crash forced miners worldwide to sell their assets at discounted prices.
The mining unit announced in March that it planned to go public. Nevertheless, the IPO was unsuccessful as investors were still skeptical about the company’s decision to halt withdrawals.
Celsius Mining is involved in the industry through loans, investments and hosting of the miners to whom it lends. Celsius Mining claimed to have invested $500 million in North America’s bitcoin mining business the previous year.