Celsius Network, the crypto lender that is facing a liquidity crisis, has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, the company said in a statement issued late Wednesday.
“Today’s filing follows the difficult but necessary decision by Celsius last month to pause withdrawals, swaps and transfers on its platform to stabilize its business and protect its customers. 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 statement read.
“This is the right decision for our community and company,” said Alex Mashinsky, Celsius' co-founder and CEO. “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.”
The lender says it has $167 million in cash on hand, enough to "support certain operations during the restructuring process."
The company has filed motions with the court to allow it to continue operating "in the normal course," so that it can pay employees and continue benefits.
Celsius isn't requesting authority to allow customer withdrawals at this time, it said. Customer claims will be addressed through the Chapter 11 process.
Kirkland & Ellis LLP is serving as legal counsel, Centerview Partners is serving as financial adviser, and Alvarez & Marsal is serving as the restructuring adviser.
More information on the case can be found here.