After reportedly returning all of its debt to DeFi lending protocols, troubled crypto lender Celsius (CEL) says it has begun voluntary Chapter 11 procedures. in the US in an attempt to stabilize its business. CEL dropped after the announcement.
At 03:03 UTC, CEL trades at $0.538 and is down 25% in a day, recovering from $0.40, reached earlier today. Prices are still up 92% for the month.
Chapter 11 of the U.S. Bankruptcy Code generally deals with reorganization, which usually involves a corporation or partnership. Chapter 11 debtors often recommend a reorganization plan to keep their business running and pay creditors over time.
“This was the right decision for our community and company,” Alex Mashinsky, Celsius Co-Founder & CEO, was quoted as saying in the announcement. “We have a strong and experienced team to lead degrees Celsius through this process.”
The company said it has $167 million in cash, which will provide “abundant liquidity to support certain operations during the restructuring” as it aims to “continue to operate normally.”
Celsius does not require the authority to allow customers to withdraw funds at this time, while customer complaints will be resolved through the Chapter 11 process, according to the announcement.
Today’s filing follows Celsius’ decision last month to suspend withdrawals, swaps and transfers on their platform. The company claims that, without a pause, accelerated withdrawals will allow certain customers – the first to act – to be paid in full while leaving others to wait for Celsius to collect. gain value from the deployment of illiquid assets or longer-term operations before they receive recovery.