The cryptocurrency lending platform, Celsius Network filed bankruptcy under chapter 11 on Thursday. Last month, the company has declared that there were suspending all withdrawals. The company announced, “the petitions for reorganization give Celsius network the best opportunity to stabilize the business, consummate a comprehensive restructuring transaction that maximizes value for all stakeholders, and emerge from Chapter 11 positioned for success in the cryptocurrency industry”. They also said to the users that the withdrawals are still suspended and “it intends to put forward a plan that restores activity across the platform”.
“On June 12, 2022, we made the difficult but necessary decision to pause withdrawals, Swap, and transfers on our platform to stabilize our business and protect our customers. Most account activity will be paused until further notice. Withdrawals, Swap, and transfers between accounts will remain paused, and rewards will stop accruing as of the date of the filing. Celsius is not requesting authority from the bankruptcy court to allow customer withdrawals at the time”, the company said in a blog post.
Celsius Declares Chapter 11 Bankruptcy, Still Won’t Let Users Withdraw Funds!
The company’s decision to freeze all withdrawals and transfers was a shock to all crypto investors, especially those who had deposited their crypto coins on the Celsius platform. The Special Committee of the Board of Directors at the Celsius Network on Thursday said that without a pausa, “the acceleration of withdrawals would have allowed certain customers those who were first to act to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery”.
However, they are not going to let customers withdraw their funds any time soon or now. Since they entered bankruptcy, Celsius Network’s creditors and customers will line up for their assets. Meanwhile, the authorities at the Celsius Network stated, “it is not requesting authority to allow customer withdrawals at this time. Customer claims will be addressed through the Chapter 11 process”. Adam Levitin, a Georgetown law professor, and crypto market expert remarked, “Celsius customers might have to wait years to get their money back. But even then they may just get pennies on the dollar”.
While filing the bankruptcy in the courts, Celsius Network said that its assets range from $1 billion to $10 billion, liabilities range from $1 billion to $10 billion, and creditors exceed 100,000. Also, the company authority stated that they had $167 million in cash. So they can support certain businesses during the restructuring process. Authorities expect the court to approve the company and continue paying employees and providing benefits.