Home » The Celsius platform declares bankruptcy

The Celsius platform declares bankruptcy

by Patricia

After weeks of difficulties and rumors, it is now done: the company Celsius declares bankruptcy. And this, even if it had managed to settle its debts in stablecoins. We take a look at what this means for the company, and its customers.

Celsius’ difficulties result in bankruptcy

Celsius’s troubles had begun in mid-June: the platform announced it was suspending cryptocurrency withdrawals and transfers, sending shockwaves through the ecosystem. Rumours of default had already been spreading since the beginning of the month, with several people pointing the finger at mismanagement of funds.

Celsius played with fire by offering its users very high returns: to honour them, it used their funds on autonomous market makers. In addition, Celsius’ exposure to the stEH token, which has fallen from its value of 1 ETH, has added fuel to the fire.

In recent weeks, however, Celsius had begun to pay off its creditors. Earlier this week, for example, the platform paid $20 million in USDC to Aave. Earlier in the month, Maker received $41 million in DAI. On Wednesday, it was reported that the platform had managed to pay off all its debts in stablecoin:

But what about the users? They were concerned that their funds were used to bail out Celsius, not to compensate them. Withdrawals are still currently blocked. Hence the backlash when Celsius announced it was declaring bankruptcy last night

Celsius’ future in question

Like Voyager Digital last week, Celsius is undergoing a voluntary “financial reorganisation”. In practical terms, this means that the company is filing for bankruptcy in a court of competent jurisdiction, in order to maximise the recovery of funds.

In its press release, Celsius refers to a “difficult but necessary” decision and goes back to the suspension of withdrawals. The priority, it said, would have been to treat its customers equally:

The acceleration of withdrawals would have allowed some customers – the first to arrive – to be paid in full, leaving others waiting.

Celsius notes that it has $167 million in liquidity, which will allow it to continue to support operations during this bankruptcy process. Employees will continue to be paid. For his part, Alex Mashinsky, co-founder and CEO of Celsius, was reassuring:

This is the right decision for our community and our company. We have a strong and experienced team that will guide Celsius through this process. I am sure that when we look back […] we will look back on this as a defining moment, a moment where we acted with resolve and confidence to serve the community and strengthen the future of the company. “

Optimistic words, but probably not enough to appease Celsius users, whose funds have now been frozen for weeks. This fall of a lending giant shows the extent of the crisis that the ecosystem is experiencing at the moment.

Related Posts

Leave a Comment