Crypto lender Celsius files for bankruptcy protection

By Ovunc Kutlu

ANKARA (AA) - Cryptocurrency loan firm Celsius Network announced on Thursday that it has voluntarily filed petitions for Chapter 11 reorganization and bankruptcy protection amid recent turmoil in the cryptocurrency market.

The decision came after the company last month paused all withdrawals, swaps, and transfers between user accounts due to extreme market conditions as the total value of the crypto market fell below $1 trillion for the first time in 17 months.

"Without a pause, 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," the firm said in a blog post.

"These Chapter 11 cases provide the company with 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," it added.

The firm said in a separate statement on Wednesday that it has $167 million in cash on hand to provide enough liquidity to support certain operations during the restructuring process.

Last week, cryptocurrency broker Voyager Digital filed for bankruptcy amid turmoil in the crypto market, while crypto hedge fund Three Arrows Capital filed for Chapter 15 bankruptcy on June 2 to protect its assets from creditors, after defaulting on Voyager Digital's loan on June 27 worth more than $670 million.