US cryptocurrency lender Celsius Network has confirmed that the company is filing for bankruptcy, a day after regulators in the US called the company “deeply insolvent”.
This accusation was followed by confirmation from the company, which filed its bankruptcy protection form in New York and has become the latest cryptocurrency entity to go belly-up.
Firms have started to fail following an unprecedented industry crash, stoked by fears about of Federal Reserve interest change (which did happen) and the collapse of a stablecoin by the name of TerraUSD.
According to official court filings with the US Bankruptcy Court for Southern District of New York, Celsius estimates its assets and liabilities to be anything between $1bn and $10bn.
The company has more than 100,000 creditors and is left with only $167m cash on hand.
The company was first criticized when it froze withdrawals and even asked for more funds to be deposited to service existing loans – regardless of whether funds were present in consumer accounts.
Celsius co-founder and CEO Alex Mashinsky tersely stated that this was the right decision for both the company and its community.
The company’s business model really took off during the pandemic when an aggressive expansion strategy saw it cultivate a healthy following of new investors keen to make a splash in the cryptocurrency market.
Many criticized the cryptocurrency lender model and said that it promised unrealistic returns in the quest of securing more customers.
Celsius is the second major cryptocurrency lender to file for bankruptcy after Voyager Digital Ltd.
A similar fate may be shared by Singapore’s Vauld, which is also struggling after the company said it would not allow withdrawals for an unspecified time.