Celsius, a cryptocurrency lending business giant, goes bankrupt

According to The Wall Street Journal, Celsius has sought bankruptcy protection a month after it halted all client withdrawals and transfers. In June, the cryptocurrency lending giant left almost two million customers unable to access their money due to "untenable market conditions." Back then, the firm claimed that suspending withdrawals would assist stabilize its assets' liquidity in order to enable it.

Celsius, a firm that was one of the ones hit by the crypto market crash, saw its token's value plummet from $7 per year ago to $3 in early April. The Journal reports that Celsius' profit margins were significantly better than conventional banks - over 18.6 percent for deposits and backed loans of little collateral. That left Celsius with very little wiggle room to move when the crypto market downturn began to affect it.

The board of directors at Celsius Lending informed investors that suspending withdrawals was difficult, but critical. According to them, "Without a pause, the acceleration of withdrawals would have allowed certain 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 assets before they receive a recovery."

Because Celsius has not sought court approval for withdrawals, they will most likely remain inaccessible as the firm reorients itself under chapter 11. While bankruptcy protects Celsius from some regulatory penalties, it will not prevent authorities from investigating the company. The director of enforcement for the Texas State Securities Board, Joseph Rotunda, said that his agency would continue its investigation into cryptocurrency lenders like Celsius. After cutting people's access to their funds in Kentucky, Alabama, New Jersey and Washington state have launched investigations into Celsius.

Source: www.engadget.com