- Celsius has filed for Chapter 11 protection in the United States Bankruptcy Court for the Southern District of New York.
- The news has spurred many with funds trapped in Celsius to share their stories on social media.
- Although Celsius claims bankruptcy was “the right decision” for the company, many with funds trapped on the platform aren’t convinced.
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Celsius announced it had filed for Chapter 11 bankruptcy early Wednesday. Multiple Celsius customers have taken to social media to share their woes following the update.
Celsius Files for Chapter 11 Bankruptcy
Celsius customers are speaking out after the troubled crypto lender filed for Chapter 11 bankruptcy.
The crypto lender shared a press release early Wednesday, confirming it had filed for Chapter 11 protection in the United States Bankruptcy Court for the Southern District of New York. In the announcement, the firm’s CEO Alex Mashinsky said that the filing was “the right decision” for the company. “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,” he added.
According to the release, Celsius currently holds $167 million in cash and plans to continue operating. At its peak, the firm held $20 billion in assets under management, but it suffered from a liquidity crisis as the crypto market tanked. It’s speculated that the firm could have a $2 billion hole in its accounts, but the exact figure is unknown due to the opaque nature of its operations. Celsius became one of several crypto lenders to freeze customer withdrawals as the market tanked in June, leading to an industry-wide meltdown that was accelerated by other factors such as the collapse of the Terra ecosystem and contagion from the insolvent crypto hedge fund Three Arrows Capital.
Customers Share Concerns
Many Celsius customers have spoken out in response to the bankruptcy filing. On a subreddit page dedicated to the company, one of the top posts features a list of suicide hotline numbers. In a separate thread titled “I am suicidal,” one user shared their troubles hours after Celsius posted its announcement. “I had all of my savings I’ve been building for 20 years in Celsius. I don’t know what to do. I have my 2nd child on the way and a mortgage to pay for…” the post read. “My wife has no idea. I am so scared on what to do. I am thinking of just ending it. It would be easier than suffering through this major loss. My whole life. Gone. I don’t know where to go or what to do.”
Celsius’ Twitter announcement features multiple responses from customers claiming they have lost access to their life savings since the firm halted withdrawals. “I’m a single mother. This will change the path of my life. I feel sick,” one user tweeted. “Can anybody let me borrow a rope please? Celsius just filed bankruptcy for me too,” another user wrote. Another revealed how they “lost just about everything” by entrusting the company with their funds.
Celsius has since published a blog post announcing its bankruptcy, explaining the details of the Chapter 11 protection. The post claims that Celsius plans “to put forward a plan that restores activity across the platform, returns value to customers, and provides choices.” However, the post also confirmed that customer withdrawals were still on hold. “Most account activity will be paused until further notice. Withdrawals, Swap, and transfers between accounts will remain paused, and rewards will stop accruing as of the date of the filing. Celsius is not requesting authority to allow customer withdrawals at this time,” it read.
Disclosure: At the time of writing this piece, the author owned ETH and several other cryptocurrencies.