Key Insights:

• Celsius files for Chapter 11 bankruptcy to allow for restructuring.

• The crypto lending firm has repaid some of its debts but still won’t reopen withdrawals.

• CEL token prices tanked 58% in a few hours following the announcement.

After a month of liquidity turmoil, the beleaguered crypto company Celsius has joined the ranks of several other prominent firms in filing for bankruptcy.

Late on July 13, the company announced that it had filed for Chapter 11 bankruptcy in New York while initiating a financial restructuring plan. Celsius claims to have $167 million in cash on hand, which will be used to provide liquidity to “support certain operations during the restructuring process.”

A Chapter 11 allows companies to continue operations while bankruptcy proceedings take place. On July 6, crypto brokerage Voyager Digital filed for a Chapter 11 as it conducts its restructuring.

The “Right Decision”

Alex Mashinsky, co-founder and CEO of Celsius, said it was the “right decision for our community and company.” He added:

“I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company.”

However, the words come as little consolation to CEL token holders as prices have collapsed around 50% over the past 8 hours since the announcement.

Members of the Special Committee of the Board of Directors explained that the suspension of withdrawals was carried out to protect customers with longer-term investments.

Celsius filed “first-day” motions which included requests to pay employees and continue their benefits without disruption. However, this is down to a court decision. It did not request permission to allow customers to withdraw their funds at the time. The reaction on crypto Twitter was vehement, as expected.

According to the bankruptcy documents, Celsius has more than 100,000 creditors, with its largest unsecured claim of $81 million from the Caymans Island-based Pharos Fund.

The company stated that “existing loans originated by Celsius affiliates will continue to be serviced,” but it would not be issuing new loans at this time.