Celsius Network, a bitcoin lender, has revealed that it has filed for bankruptcy.
Due to a decline in cryptocurrency values and the May collapse of TerraUSD, a significant token, crypto lending has declined over the past few months.
Last month, Celsius halted withdrawals and account transfers, blaming the volatile market conditions. New Jersey, Texas, and Washington state securities regulators intervened to look into the choice made by the crypto lender.
Members of the special committee of the board of directors announced on Wednesday that Celsius had filed for Chapter 11 protection.
"Today's filing follows Celsius's difficult but necessary decision last month to pause withdrawals, swaps, and transfers on its platform in order to stabilize its business and protect its customers.”
“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 asset deployment activities before they received a recovery," says the company.
The US corporation reported having $167 million in cash on hand to fund some operations while the reorganization process was underway. On a consolidated basis, it put its estimated assets and liabilities at between $1 billion and $10 billion.
The company claimed in a news release that it had filed court papers to be allowed to carry on with business as usual and that it was not asking for permission to allow customer withdrawals at this time.
According to Celsius, the Chapter 11 procedure would be used to address customer claims.