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Victim of the crypto crash:
Celsius Network is insolvent
Photo: DADO RUVIC / REUTERS
The imbalance had already become apparent, now things are getting serious for Celsius Network: The US company, which acts as a lender of cryptocurrencies, has filed for bankruptcy in New York.
According to media reports, the company filed an application under Chapter 11 (Chapter 11) of US bankruptcy law with a court in the south of the US metropolis.
According to court documents, Celsius reported assets and liabilities in the range of one to ten billion dollars, according to the Reuters news agency.
Celsius Network had positioned itself as one of the largest crypto lenders on the market.
These companies accept crypto holdings from investors in exchange for attractive fixed interest rates.
On the other hand, companies like Celsius lend the Bitcoins and Co. they are given to large investors who do business with them for a fee.
Due to the market slump that cryptocurrencies, like other risk assets, have experienced in recent weeks, Celsius has gotten into trouble.
As the "Wall Street Journal" reports, the company had apparently acted too risky, with promises of high returns to investors and a low margin for Celsius itself. This was apparently the crypto company's undoing.
The bankruptcy does not come as a surprise: Celsius had already frozen payments to investors a few weeks ago.
This also affected customers of the Berlin start-up Nuri, which had forwarded funds to Celsius.
It is also not the first bankruptcy in the wake of the recent slump in the crypto market.
A week ago, Celsius competitor Voyager Digital also filed for bankruptcy.
Another prominent example is the hedge fund Three Arrows Capital, which has also been in bankruptcy proceedings since the beginning of July.
The difficulties of this billion-dollar fund alone caused several other companies in the crypto market to get into trouble.
According to WSJ, Celsius lent $650 million in crypto assets to Three Arrows and did not get them back.
Celsius was founded in 2017 by Alex Mashinsky.
According to "WSJ", the company was valued at more than three billion dollars in the last financing round in autumn 2021.
As of May, the newspaper said the platform had assets of $11.8 billion.
In October of the previous year it was still 15 billion dollars.
With the bankruptcy according to Chapter 11 of the US bankruptcy law, Celsius creates the chance of a restructuring and rescue, at least in theory.
Chapter 11 gives debtors temporary protection from their creditors to reorganize.
As a rule, a reorganization concept is developed together with the creditors, which is examined by the insolvency court.
But the process also has critics, who say the protection from creditors gives insolvent companies an undue advantage over their competitors.
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