Cryptocurrency loan company Celsius filed for bankruptcy under Chapter 11 yesterday, one month after the lender announced it was suspending withdrawals. The petitions for reorganization give Celsius “the best opportunity to stabilize the business, consummate a comprehensive restructuring transaction that maximizes value for all stakeholders, and emerge from Chapter 11 positioned for success in the cryptocurrency industry,” the company said.
In an FAQ updated yesterday, Celsius told users that withdrawals are still suspended. As part of the bankruptcy process, Celsius said it “intend[s] to put forward a plan that restores activity across the platform.” But it offered no timeline for allowing withdrawals and other suspended transactions again:
On June 12, 2022, we made the difficult but necessary decision to pause withdrawals, Swap, and transfers on our platform to stabilize our business and protect our customers.
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 [from the bankruptcy court] to allow customer withdrawals at this time.
Existing loans “will continue to be serviced” but “Celsius will not be issuing new loans at this time,” the company said. Celsius also said that if it hadn’t halted withdrawals, “the acceleration of withdrawals would have allowed specific 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.”