Friday, November 25, 2022
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Celsius platform declares bankruptcy

After weeks of difficulties and rumours, it is now done: the Celsius company declares bankruptcy. And this, even if she had managed to settle her debts in stablecoins. The point on what this means for the company, as well as its customers.

https://cryptoast.fr/plateforme-celsius-se-declare-bankruptcy/

Celsius’ difficulties end in bankruptcy

Celsius’s problems had started in mid-June: the platform had announced suspend cryptocurrency withdrawals and transfers, creating a shock wave in the ecosystem. Rumors of default had already been spreading since the beginning of the month, and several people had pointed the finger at mismanagement of the funds.

Celsius played with fire by offering its users very high returns: to honor them, it used their funds on autonomous market makers. Otherwise, Celsius exposure to the stEH tokenwhich tumbled from its value of 1 ETH, helped add fuel to the fire.

In recent weeks, however, Celsius had begun to repay its creditors. Earlier this week, the platform, for example, paid $20 million in USDC to Aave. Earlier in the month, Maker received $41 million in DAI. On Wednesday, we learned that the platform had managed to repay all its debts in stablecoin :

But what about the users? The latter feared that their funds had been used to bail out Celsius, not to compensate them. Withdrawals are still currently blocked. Hence the hostile reactions when Celsius announced that night to declare bankruptcy.

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The future of Celsius in question

Just like Voyager Digital last week, Celsius therefore submits to one “financial reorganization” voluntary. Concretely, this means that the company declares itself bankrupt before a competent court, in order to maximize the recovery of funds.

In its statement, Celsius refers to a decision “difficult but necessaryยป, and returns to the suspension of withdrawals. According to her, the priority would have been to treat her clients on an equal footing:

Accelerating withdrawals would have allowed some customers โ€“ the first to arrive โ€“ to be paid in full leaving others waitingยป

Celsius notes that it has $167 million in liquidity, which will allow it to continue supporting operations during this bankruptcy process. Employees will continue to be paid. For his part, Alex Mashinsky, co-founder and CEO of Celsius, was reassuring:

This is the right decision for our community and our business. We have a strong and experienced team that will guide Celsius through this process. I’m sure when we look back [โ€ฆ] we will consider this moment as defining, a moment when we acted with resolve and confidence to serve the community and strengthen the future of the company.ยป

Optimistic words, but which will probably not be enough to appease the users of Celsius, whose funds have now been blocked for weeks. This fall of a lending giant in any case shows the extent of the crisis that the ecosystem is experiencing right now.

๐Ÿ‘‰ To go further โ€“ Analysis: Celsius Network, what mistakes led to its downfall?

Source: Celsius press release

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