Embattled cryptocurrency lender Celsius has filed for Chapter 11 bankruptcy protection from its creditors.
In a written statement, Celsius said it plans to turnaround its business by restructuring in a way “that maximizes value for all stakeholders.”
In the bankruptcy filing, Celsius said it has $167 million U.S. in cash to support its ongoing operations.
The cryptocurrency company, based in Hoboken, New Jersey, has been in the news after it froze customer accounts at the end of June, citing “extreme market conditions.”
Celsius is the latest cryptocurrency firm to file for bankruptcy as prices for digital coins and tokens continue to slump. Voyager filed for bankruptcy protection last week after suffering losses due to exposure to now defunct hedge fund Three Arrows Capital.
A judge in a New York City bankruptcy court froze Three Arrows Capital’s remaining assets earlier this week as the cryptocurrency hedge fund liquidates its assets to repay clients and creditors.
Celsius said it has more than 100,000 creditors. The firm was one of the largest players in the cryptocurrency lending sector with more than $8 billion U.S. in loans to clients, and almost $12 billion U.S. in assets under management. Celsius said it had 1.7 million customers at the end of June this year.
Celsius would lend cryptocurrencies to customers willing to pay high interest rates to borrow it. Celsius would then split some of the revenue with users. But the structure collapsed amid a liquidity crunch in the cryptocurrency market that began in late June.
Celsius is being sued by a former investment manager who alleges the company failed to hedge risk, artificially inflated the price of its own digital coin, and engaged in activities that amounted to fraud. The lawsuit accuses Celsius of operating as a Ponzi scheme.
