Crypto lender giant Celsius filed for bankruptcy protection on 13 July 2022, according to WSJ. That happened after the month after the pause of all withdrawals. There are almost 1.8 million users who were left without access to their funds. Initially, the company described this as ‘bad market conditions,’ and freezing withdrawals were aimed at stabilizing the liquidity (and, therefore, to help the company meet its obligations in the future).
Celsius suffered a lot due to the global trend of cryptocurrency collapse. While exactly one year ago, its token (Celsius, CEL) was worth $5.62, it is now worth only $0.77, according to Coinbase.
But another important problem of Celsius was too high a yield, about 19% on deposits. Moreover, the credit size was quite large and secured by small collateral. As a result, the cryptocurrency downturn had a devastating effect on the company because it had no room to maneuver.
After the company filed for bankruptcy, it is unlikely that its customers will get their money back (I’m not even talking about interest) because the company has not asked the court to allow withdrawals. Nevertheless, the company is still optimistic (at least in words), specifically saying that Charter 11 is the best opportunity to stabilize the business. The company also apologized for the fact that “communication between the team and the community has been limited in the last few weeks.
Also, the company published a YouTube video in which it reminded that many large companies have gone through bankruptcy proceedings and now they are OK, remembering Marvel and General Motors. I don’t want to dwell on this for long, because this post is just about the news. However, don’t you think the type of business Celsius and GM or Marvel were in was a little different?
