After weeks of conjecture and hearsay, the representatives for the crypto lending platform Celsius have officially notified the authorities that the company has filed for Chapter 11 bankruptcy protection.
Alex Mashinsky, co-founder and CEO of Celsius, said in a late-Wednesday press release that the filing is the "right decision for our community and company," adding that Celsius will be led through this process by a team that is both "capable and seasoned."
The CEO says he is convinced that the will see this new transition as a "defining moment" in which acting with resolution and confidence benefited the community and "bolstered the company's future."
The filing will allow Celsius to stabilize its business and complete a comprehensive restructuring that maximizes value for all stakeholders, according to the company.
Voluntary applications for reorganization under Chapter 11 were submitted to the Southern District of New York by Celsius and a number of its subsidiaries, according to a press release. The organization boasts "ample liquidity, with $167 million in cash to fund operations."
In June, Celsius halted all customer withdrawals and swaps, citing liquidity difficulties, causing authorities in Alabama, Kentucky, New Jersey, Texas, and Washington to launch investigations.
The company stated at the time, "We are taking this essential measure for the sake of our whole community in order to stabilize liquidity and operations while we maintain and protect our assets."
In accordance with our commitment to our consumers, clients will continue to earn rewards throughout the break. The following month, Celsius repaid loans and outstanding debts totaling over $1 billion.
The Vermont Department of Financial Regulation issued a press release yesterday advising Celsius investors to "exercise extreme caution," stating that the cryptocurrency company is "seriously insolvent and lacks the assets and liquidity to honor its obligations to account holders and other creditors."
Celsius is not authorized to conduct business in Vermont. The state authority also cautioned investors against potential schemes and sites that advocate shorting the CEL coin.
Jason Stone, the CEO of KeyFi, Inc., filed a lawsuit against Celsius last week. Stone argues in the lawsuit that Celsius exploited customer cash to "manipulate crypto asset markets, failed to implement fundamental accounting controls that put those deposits at risk, and failed to keep its commitments."
The Wall Street Journal reported on Sunday that Celsius has recruited attorneys from Kirkland & Ellis LLP to monitor the company's reorganization preparations. Celsius has acknowledged in a press release that this is true.