June 8, 2023

Great Indian Mutiny

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Major crypto lender files percentage for bankruptcy

Major crypto lender files percentage for bankruptcy

July 13 (Reuters) – U.S. lender Celsius Network said on Wednesday it has filed for bankruptcy in New York, becoming the latest victim in the cryptocurrency sector of a massive plunge in token prices.

New Jersey-based Celsius froze withdrawals last month, citing “harsh” market conditions, cutting off access to savings for retail investors and sending jolts across the crypto market.

In a lawsuit before the US Bankruptcy Court for the Southern District of New York, Celsius estimated its assets and liabilities at $1 billion to $10 billion, with more than 100,000 creditors. The company has $167 million in cash on hand.

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“This is the right decision for our community and our company,” said Alex Mashinsky, co-founder and CEO of Celsius.

Cryptocurrency lenders like Celsius have thrived during the COVID-19 pandemic, attracting depositors with high interest rates and easy access to loans that traditional banks rarely offer. They lent the tokens to institutional investors mostly, making a profit on the difference.

But the lenders’ business model came under scrutiny after a sharp sell-off in the cryptocurrency market driven by the collapse of the terraUSD and Luna tokens in May.

Another US crypto lender, Voyager Digital Ltd (VOYG.TO), to file for bankruptcy this month after suspending withdrawals and deposits. Singapore’s Fold Bank, a smaller bank, also froze withdrawals this month. Read more

Celsius said in a statement that it did not request the authority to allow customer withdrawals, adding that it had asked the court to allow it to continue its operations such as paying employees.

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Celsius’ move in June to freeze withdrawals prompted state securities regulators in New Jersey, Texas and Washington to launch investigations into the companies. Read more

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(Maria Bonzahat reports in Bengaluru); Editing by Sherry Jacob Phillips and Edmund Blair

Our criteria: Thomson Reuters Trust Principles.