CNBC reported Wednesday night Celsius had informed state regulators it would file for bankruptcy “imminently” as it struggles with liquidity.
Celsius announced on Thursday morning that it had initiated voluntary Chapter 11 proceedings. The press release revealed that the company has $167 million in cash and will use this money to support operations.
“The opportunity to stabilize its business, and consummate a comprehensive restructuring deal that maximizes value for all parties.”
Investors had been offered hope earlier Wednesday when Celsius paid all its DeFi loans to Compound. The debt total has dropped from hundreds of millions down to $0, which unlocks around $200 million in collateral.
#Celsius had previously had the majority of their DeFi (on-chain) debt across these three positions (Maker wBTC Vaault, Compound and Aave).
Their Maker & Compound debt was reduced to $0 but they still owe $70k in REN in their Aave situation.
Josh (@CryptoWorldJosh), July 13, 2022
Investors are concerned that funds they had hoped would be returned may have been used for DeFi loans, rather than customers. On Twitter, investors have voiced their concerns.
I wish I had never heard of you
Justin Taylor (@TheSmarmyBum), July 14, 2022
Alex Mashinsky (Co-Founder and CEO of Celsius), broke his silence by stating in the release:
“This is the right decision to make for our company and community. To guide Celsius through this process, we have a strong, experienced team.
When we look back on the history of Celsius, I believe that we will find this as a defining moment. It was a time when resolve and confidence were exhibited to serve the community and strengthen the future of the company.
The court approved “requests for employees to be paid and their benefits continued without interruption” during the proceedings. Celsius will still be in operation, but no information is available about when or if withdrawals can be made.
Celsius declares bankruptcy following the repayment of CryptoSlate DeFi loans.
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