Cryptocurrency lending platform Celcius announced that they have filed for chapter 11 bankruptcy.
- A 61-page court filing released on Thursday showed that the company was at a $1.2B loss, with $5.5B in liabilities and only $4.3B in assets. With a majority ($4.7B) of the liabilities attributed to the users of the platform. Celcius CEO, Alex Mashinsky stated that “This is the right decision for our community and company.”
- As per Celcius’ announcement, the company will continue to operate. Celcius has over $167M cash in hand, this will “provide ample liquidity to support certain operations during the restructuring process.”
- Prior to filing for bankruptcy, Celcius had paid off over $120M in debt to various DeFi protocols. This move raised its collateral to safeguard against its liquidation and loss of users’ funds which have been frozen on the platform since June 12th.
- Mashinsky believes that “the amount of digital assets on the company’s platform grew faster than the company was prepared to deploy,” and admitted to a series of mistakes involving lending to an unnamed platform with over $440M of the loan still outstanding, and a deal withy Tether falling apart incurring a loss of around $100M.