BREAKING: Celsius has filed for bankruptcy

Published at: July 13, 2022

Crypto lending platform Celsius has filed for Chapter 11 bankruptcy, with its lawyers starting to notify individual United States state regulators as of Wednesday.

According to an email received by the platform's users, the company has voluntarily filed petitions for Chapter 11 reorganization, also known as bankruptcy. This comes just days after the embattled lending platform replaced its previously hired law firm Akin Gump Strauss Hauer & Feld LLP with Kirkland & Ellis LLP, the same firm that assisted Voyager Digital with its bankruptcy filing last week.

Earlier in the day, Celsius closed off the last of its decentralized finance (DeFi) debts owed to Compound, Aave and Maker, reducing its initial debt of $820 million to just $0.013 over the course of a month.

Still unknown, however, will be the fate of depositors who still have their assets locked up on the lending platform. Neither the company nor its CEO Alex Mashinsky has made any public comments about whether depositors will receive any percentage of their funds back.

On Tuesday, Vermont’s Department of Financial Regulation (DFR) issued a warning against the troubled crypto lending firm, reminding consumers that the firm is not licensed to offer its services in the state.

The DFR also stated it believed the company was “deeply insolvent” and doesn’t possess “assets and liquidity” to fulfill its obligations toward the customers and accused them of mismanaging customer funds by allocating them toward risky investments.

Related: Bombshell allegations of fraud as KeyFi takes Celsius to court

Vermont has become the sixth state in America to open an investigation into Celsius’s crypto interest rate accounts, joining the likes of Alabama, Kentucky, New Jersey, Texas and Washington.

Rumors of Celsius’ insolvency began circulating last month after the crypto lender was forced to halt withdrawals due to “extreme market conditions” on June 13.

Update: Celsius vows to return from bankruptcy but expert fears repeat of Mt Gox

Tags
Regulation
Business
Bankruptcy
Related Posts
Bahamian securities regulator ordered the transfer of FTX’s digital assets
The Securities Commission of The Bahamas (SCB) said it had ordered the transfer of all digital assets of FTX Digital Markets (FDM) to a digital wallet owned by the commission on Nov. 12. In a Nov. 17 statement, the SCB said it exercised its power as a regulator acting under the authority of a Supreme Court order — moving the assets to a “digital wallet controlled by the Commission, for safekeeping.” Securities Commission of The Bahamas Assumes Control of Assets of FTX Digital Markets Ltd. pic.twitter.com/IzW4PGZSJm — Securities Commission of The Bahamas (@SCBgov_bs) November 18, 2022 SCB justified last week’s …
Blockchain / Nov. 18, 2022
SEC files objection to Binance.US’s plans to acquire Voyager Digital
The United States Securities and Exchange Commission (SEC) has filed a “limited objection” to crypto exchange Binance.US’s proposed $1 billion takeover of bankrupt crypto lender Voyager Digital, citing a lack of “necessary information.” The limited objection was filed on Jan. 4, with the SEC pointing to a lack of detail regarding Binance.US’s ability to fund the acquisition, what Binance.US’s operations would look like following the deal, and how customer assets will be secured during and after the transaction. A limited objection is similar to a normal objection but only applies to a specific part of the proceedings. Additionally, the regulator …
Regulation / Jan. 5, 2023
Sam Bankman-Fried lawyers reach agreement on use of messaging apps
Sam Bankman-Fried’s (SBF's) lawyers have reached an agreement with federal prosecutors concerning his use of messaging apps. According to a Feb. 6 court document, both parties have agreed SBF “shall not use any encrypted or ephemeral call of messaging application, including but not limited to Signal.” However, under the agreement, the former FTX CEO will be able to access FaceTime, Zoom, iMessage, SMS text, email and Facebook Messenger. He will also be allowed to use the encrypted messaging service WhatsApp but only if “monitoring technology is installed on his cellphone that automatically logs and preserves all WhatsApp communications.” The latest …
Regulation / Feb. 7, 2023
SEC files objection to Binance US bid for Voyager assets
The United States Securities and Exchange Commission (SEC) has objected to Binance.US’ move to acquire over $1 billion of assets belonging to the defunct cryptocurrency lending firm Voyager Digital. According to a Feb. 22 filing submitted to the U.S. Bankruptcy Court in the Southern District of New York, the SEC believes that certain elements of the asset restructuring plan of Binance.US’ acquisition could breach Securities Laws. The SEC is formally investigating whether Binance.US and related debtors violated anti-fraud, registration and other provisions of the federal securities laws. The SEC noted particular concern around the security of assets through the planned …
Regulation / Feb. 23, 2023
BlockFi execs, Gemini named in proposed lawsuit by a disgruntled investor
An investor with nearly $2 million worth of funds frozen in bankrupt cryptocurrency lender BlockFi has filed a class action complaint against its founders, two directors and crypto exchange Gemini. In a Feb. 28 complaint filed in the U.S. District Court for the District of New Jersey, investor Trey Greene accused the defendants of numerous wrongdoings, including violating the consumer fraud and exchange acts, breaching its fiduciary duties, as well as offering and selling unregistered securities. “The unregistered securities sold by the BFI [BlockFi] Defendants on behalf of BlockFi were marketed and sold via a steady stream of misrepresentations and …
Regulation / March 2, 2023