Another Chill in The Crypto Winter as Celsius Files for Bankruptcy

Key points:
Celsius, The Cryptocurrency Lender Files For Bankruptcy
This After Customer Accounts Were Frozen In June
Yet Another Chill In The Crypto Winter

The New Jersey-based cryptocurrency lender, Celsius, filed for bankruptcy in New York on Wednesday. This comes in the wake of last month’s step by the US crypto firm to freeze all withdrawals by customers. Celsius is just another sufferer in the big chill that is being seen across the decentralized finance (DeFi) industry in the 2022 crypto winter.

Celsius, The Cryptocurrency Lender Files for Bankruptcy

The cryptocurrency lender Celsius Network Ltd filed for Chapter 11 bankruptcy in the Southern District of New York on Wednesday, 13th July 2022. The company is one of the world’s largest crypto lenders and built a business loaning crypto borrowed from its customers to institutional investors. In addition, they also participated in numerous decentralized-finance applications.

Also Read: Crypto Crash Extends as Binance and Celsius “Pause” Withdrawals

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Alex Mashinsky, Celsius co-founder and Chief Executive, stated, “This is the right decision for our community and company.” The firm has requested to continue to operate but is not requesting the ability to permit withdrawals by customers at this stage now, stating claims would be dealt with via the Chapter 11 process.

This After Customer Accounts Were Frozen In June

This development comes a month after the cryptocurrency lender in our report Crypto Crash Extends as Binance and Celsius “Pause” Withdrawals. Celsius previously stated that “We are taking this necessary action for the benefit of our entire community in order to stabilize liquidity and operations.” They went on to confirm that even while their accounts were frozen, their 1.7 million users would still be accruing rewards. The freezing of withdrawals did cause investigations to be launched in New Jersey, Texas and Washington by state securities regulators.

Yet Another Chill In The Crypto Winter

As we have continued to cover, this development is just another part of the chill that is gripping the DeFi world, with multiple crypto industry forms feeling the brunt of what has been called a crypto winter.

The list now sees failures by Terra Luna, Coinflex, 3 Arrows Capital (3AC), Voyager Digital, Babel, and Vauld, as well as Celsius. How long will this domino effect last, and how much bigger are the possible casualties?