Celsius network has recently started to pay back its debt and reacquire collateral from companies like Aave and Maker. It only has $58 million remaining to be paid back, for which it will free up more than $200 million in collateral. However, due to the bad market conditions and their sensitive position right now, Celsius Network has filed for bankruptcy protection. The reports of these filings were private, and CNBC did not name the source.
Celsius Network files for chapter 11 bankruptcy protection
The company made a statement on Wednesday that it will look to stabilize its business using the $167 million in cash they have. Celsius’s goal is to maximize the value they provide to all stakeholders by restructuring its business model. The CEO of the company said that he is confident that this will be the defining moment for them and will strengthen the future of the company. So, the rumors of them filing for bankruptcy protection do come as a surprise. It seemed they would be able to pull through this.
The director of enforcement at the Texas State Securities Board said they would continue to investigate Celsius and protect the clients even if they become insolvent. Celsius reportedly has over 100,000 creditors, as per the bankruptcy document. It just doesn’t feel right to see a company going bankrupt when they had $12 billion in AUM a while back. They also offered more than $8 billion in loans to their clients.
Allegations on Celsius
A former investment manager filed a lawsuit against the company, saying that they increased the price of their coin artificially and also failed to manage risk effectively. Therefore, they are already under investigation by different state regulators. They were even allegedly investing in assets that were very risky and not very liquid as investments. Due to the losses they suffered and their poor risk management, the company doesn’t have enough assets to “cover its outstanding obligations.”
It shows the importance of having your own crypto in your bank account. After all, the phrase “not your keys, not your coins” has stood the test of time, and companies have shown us its reality time and again.
What are your thoughts as Celsius Network files for bankruptcy protection? And do you think that this bear market will push more such companies into bankruptcy? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
Also Read: Charlie Munger says he avoids crypto like a dirty sewer.
