The cryptocurrency lending platform Celsius Network has filed for bankruptcy as the industry continues to feel the effects of massive price drops.
The company, based in New Jersey in the United States, froze withdrawals in June, as a number of cryptocurrency platforms struggled with the price collapse. The company denied users access to their savings, citing “extreme market conditions.”
Since the peak of a massive rally in 2021, cryptocurrencies have lost $2 trillion (€1.9 trillion) in value, a phenomenon known as crypto winter.
Celsius is a major player in the crypto lending space, and it raised approximately $750 million (€716 million) in funding at the end of 2017.
It functioned by offering customers who deposited cryptocurrencies on the platform interest on products.
Now, following the freezing of withdrawals, which left customers unsure of the fate of their deposited funds, the company has filed for chapter 11 bankruptcy with the New York bankruptcy court.
It announced in a blog post on Thursday, July 14 that it had “begun a financial restructuring process to stabilize the business.”
Chapter 11 bankruptcy permits a company to restructure its finances while continuing some operations.
The company stated that it is not requesting to allow customer withdrawals at this time and will “present a plan” to restore platform activity.
It did not specify when customers could expect to withdraw funds or resume trading on the platform.
Celsius estimated its assets and liabilities to be between $1 billion (€998 million) and $10 billion (€9.95 billion), with more than 100,000 creditors, in its court filing. The company has available cash of $167 million (€166 million).
In June, following the freezing of withdrawals, regulators in New Jersey, Texas, and Washington began investigating the company.
Following the May collapse of the so-called stablecoin TerraUSD and its sister token Luna, the business models of lenders such as Celsius have come under increased scrutiny.
This month, another US cryptocurrency lender, Voyager Digital, declared bankruptcy after suspending withdrawals and deposits. Vault, a smaller Singaporean lender, has also frozen withdrawals this month.
Bitcoin, the largest cryptocurrency by market capitalization, is currently trading at approximately $19,800 (€19,701), a decrease of 70% from its all-time high of $64,800 (€64,511) in April of last year.