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Celsius, a specialist in crypto-asset lending, files for bankruptcy – Sciences et Avenir

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by Maria Ponnezhath and Tom Wilson

(Reuters) – U.S. crypto-asset lending specialist Celsius Network said on Wednesday it had filed for bankruptcy in New York, adding its name to the list of victims of the market crash.

The New Jersey-headquartered firm froze customer withdrawals last month citing “extreme” market conditions, depriving investors of any access to their savings, which amplified the turmoil in the “crypto” market.

The most well-known cryptocurrency, bitcoin, has lost 70% of its value since its peak in November.

In the case filed Wednesday in the bankruptcy court for the Southern District of New York, Celsius estimates its balance sheet between one and 10 billion dollars (as many euros) and the number of its creditors at more than 100,000. Its treasury represents 167 million dollars.

“This is the right decision for our community and for the company,” said co-founder and chief executive Alex Mashinsky.

Crypto-asset lending specialists, including Celsius, have taken full advantage of the boom in this market segment since 2020 by promising savers high returns and easier access to credit than that offered by traditional banks.

Their business model is to lend cryptoassets, like bitcoin, to mostly institutional investors in exchange for compensation.

But its viability has been compromised by the fall in the prices of most cryptoassets in recent months, which in May led to the collapse of very popular “tokens” such as terraUSD or luna.

A competitor of Celsius, Voyager Digital, already filed for bankruptcy a few days ago after suspending all withdrawals and deposits. A third, Singapore-based Vauld, also froze withdrawals.

Celsius clarified that it had not asked the competent authorities to authorize a resumption of withdrawals from its customers. The freezing of these withdrawals last month led financial authorities in New Jersey, Texas and Washington state to open investigations into the company.

(Report Maria Ponnezhath in Bangalore, French version Marc Angrand, edited by Kate Entringer)

Source: www.sciencesetavenir.fr

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