As the volatile crypto market continues to tumble, Celsius Network has decided to seek help from the authority by filing a voluntary petition under the Chapter 11 bankruptcy code at the United States Bankruptcy Court for the Southern District of New York.
This comes after the crypto lender tried implementing a number of measures including withdrawing WBTC and ETH tokens from Aave to pay its loans.
Following the news of the filing of the Chapter 11 Bankruptcy, the native token of Celsius Network, CEL, took a bow and has almost shed a quarter of its previous gains.
Over the last 30 days, CEL price had risen by about 112.5%. However, today at the time of writing, CEL had registered a drop of about 16.5% over the past 24 hours.
Celsius is. However, not the first crypto firm to file for Chapter 11 bankruptcy. Over the past month, major crypto firms like crypto lender Voyager Digital and crypto hedge fund Three Arrows Capital have also filed for the same in an effort to secure their companies.
Why did Celsius file for Chapter 11 Bankruptcy?
After filing for Chapter 11, Celsius will be able to continue with its operations once the bankruptcy court approves its filing. However, the firm maintained that customers will still not be allowed to carry out withdrawals at the moment.
In the meantime, Celsius will be undergoing a restructuring process that will be aimed at increasing the value for its investors. Where during the process, it will provide ample liquidity to support some of its operations with its $167 million cash at hand as it tries to stabilize its businesses.
A restructuring process might be the only remedy for the crypto firm during the current bear market condition.
While addressing the matter, Celsius CEO and Co-founder, Alex Mashinsky said:
“This is the right decision for our community and company. We have a strong and experienced team in place to lead Celsius through this process. I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company.”
To save the company from insolvency, Celsius stopped all withdrawals last month. This has helped them pay off part of the debts they owed. In total, they have paid out debts amounting to about $800 million to a number of other crypto firms including Maker, Aave, and Compound Finance.
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