CNBC reported Wednesday night that Celsius has informed: “state regulators that it’s filing for bankruptcy ‘imminently.” The company will move toward chapter 11 bankruptcy as it struggles to deal with its liquidity issues.
Celsius announced early Thursday morning that they had “initiated voluntary Chapter 11 proceedings.” Celsius revealed in a press release that it only has $167 million in cash, which will be used to “support operations.” The voluntary liquidation seeks to provide the following benefits to the company:
“the opportunity to stabilize its business and consummate a comprehensive restructuring transaction that maximizes value for all stakeholders.”
Earlier in the day, Celsius paid off all of its DeFi loans to Compound, giving investors hope. The total debt has been reduced from hundreds of millions of dollars to zero, freeing up approximately $200 million in collateral.
Investors are concerned that the funds they expected to be returned have been used to repay DeFi loans rather than customers. Investors have taken to Twitter to express their concerns.
Alex Mashinsky, Co-Founder and CEO of Celsius, stated in the release:
“This is the right decision for our community and company. We have a strong and experienced team in place to lead Celsius through this process.
I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company.” Throughout the proceedings, the court has approved “requests to pay employees and continue their benefits without interruption.” Celsius will remain operational, but there is no word on when or if withdrawals will be reinstated.
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