Crypto lending platform Celsius Network has filed for Chapter 11 bankruptcy as it continues to struggle with liquidity issues.
Early this morning, the platform's managers announced that "Celsius has initiated voluntary Chapter 11 proceedings"to stabilize the business and work on developing a restructuring that is beneficial to all stakeholders.
The filing was made in the Southern District of New York and included Alameda Research, the trading and financing company co-founded by Sam Bankman-Fried, as one of Celsius's main creditors.
In the press release announcing the bankruptcy, Celsius Network also revealed that the company only has $167 million in cash, which is will be used to “support operations”.
The voluntary liquidation is intended to give the company the opportunity to stabilize its business and consummate a restructuring transaction comprehensive that maximizes value for all stakeholders.
Celsius Network's announcement comes amid the company's latest news, which reported that they had paid off their debts to Aave, Compound and MakerDAO, going from having several million dollars in debt, to unlocking several hundred million in collateralized tokens.
Alex Mashinsky, co-founder and CEO of Celsius, has broken his silence after several weeks to speak out on his Twitter account, pointing out that the decision taken was the right one, both for the community and for the company. Mashinsky points out that the company has a strong and experienced team able to cope with this very complicated process.
Despite having filed for Chapter 11, the CEO of Celsius Network is still confident in the future of the company and assures that this moment, although very complex and delicate, will be beneficial in the long term for the company, which will emerge stronger.
For now, the court has approved the company's requests to pay employees and continue its profits uninterrupted throughout the process. Celsius Network will therefore be able to continue operating, although it remains unclear when withdrawals will be enabled again, if ever.
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