Troubled crypto lending firm Celsius and its mining unit have filed for chapter 11 bankruptcy. The filing was done in the U.S. Bankruptcy Court for the Southern District of New York on Wednesday.
According to the court filing, Celsius reported estimated assets and liabilities consolidated in the $1 billion to $10 billion range. The filing will allow the company to steady its operations and complete a thorough restructuring deal that optimizes value for all parties.
Members of the Board of Directors’ Special Committee said,
“Today’s filing follows the difficult but necessary decision by Celsius last month to pause withdrawals, swaps, and transfers on its platform to stabilize its business and protect its customers. Without a pause, the acceleration of withdrawals would have allowed certain customers—those who were first to act—to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery.”
The development comes moments after Celsius paid its debt to Compound, reclaiming $200 million worth of collateral. Last week the firm also paid its debt to Maker Protocol. Additionally, last Monday, the firm repaid its Bitcoin loan, releasing $453 million in collateral.
CEO and co-founder Alex Mashinsky said,
“This is the right decision for our community and company,”
With $167 million in cash, Celsius will have more than enough liquidity to maintain certain activities while the restructuring process is underway. Additionally, the firm has submitted several typical motions with the Court to let the company carry on with business as usual to achieve a seamless transition into Chapter 11.
Why did Celsius Mining file for bankruptcy?
Celsius’s mining unit had filed a confidential S1 draft registration with the SEC in March of 2022. However, crypto mining stocks were falling at the time, and the subsequent crash forced miners worldwide to sell their assets at discounted prices.
The mining unit announced in March that it planned to go public. Nonetheless, the IPO was unsuccessful as investors were still skeptical of the company’s decision to halt withdrawals.
Celsius Mining has been engaged in the sector through lending, investing, and hosting the miners it lends to. Celsius Mining claimed to have invested $500 million the previous year in North America’s bitcoin mining activities.