Turmoil in cryptocurrency market hits Celsius as platform files for voluntary bankruptcy in United States

A month after Celsius froze withdrawals from its platform, the cryptocurrency investment platform Wednesday, announced that it has filed for bankruptcy in the United States. The firm has started voluntary Chapter 11 proceedings in order to give the company the chance to stabilise its operations. The company said in its statement that it was looking to restructure in a way that would maximise value for all stakeholders. It also said that it has $167 million in cash on hand to cover immediate requirements in the meanwhile. As per an AFP report, this is the latest sign of the ongoing turmoil in the cryptocurrency industry. Voyager Digital, a specialist in lending cryptocurrencies, also declared bankruptcy last week.

Watch | Crypto lender Celsius files for bankruptcy

Three Arrows Capital, a Singaporean investment company, is in liquidation. Due to a cash shortage, certain businesses, including CoinFlex and Babel Finance, have also stopped accepting withdrawals.

As per a statement by a special committee of the Celsius board of directors, without the withdrawal freeze, “the acceleration… would have allowed certain customers — those who were first to act — to be paid in full while leaving others behind to wait.”  

Also read | Electricity used to mine Bitcoin falls as crypto crisis widens

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

“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,” he added.

Also read | Bitcoin drops below $20,000 to lowest since December 2020

In the US, Chapter 11 enables an organisation that is unable to pay its debts to restructure away from its creditors while carrying on with its current business.

Bitcoin, one of the most well-known cryptocurrencies, has lost more than half of its value since the start of the year and is now worth just over $20,000. When it reached its peak in November 2021, it was valued at around $69,000.

(With inputs from agencies)

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