C Network, one of the world’s largest crypto lenders, has filed for bankruptcy protection, a month after freezing customer property in the face of intense turmoil in the crypto market that has overturned the business models of several companies.
The New Jersey-headquartered startup was valued at $3.25 billion as it expanded its “oversubscribed” Series B funding round to $750 million in November, said in a filing. filed for Chapter 11 bankruptcy in federal court in New York that they had between $1 billion. and $10 billion in assets and liabilities and more than 100,000 creditors.
The “necessary” decision to file for bankruptcy would give the company an “opportunity to stabilize its business,” it said.
Alex Mashinsky, Celsius’s co-founder and chief executive officer, wrote in a statement: “We have a strong and experienced team to lead C in this process. “I am confident that as we look back at the history of degrees Celsius, we will see this as a defining moment where acting with determination and confidence serves the community and strengthens the future of the company.”
This announcement follows weeks of speculation about the financial strength of Celsius, the company that has established one of the largest crypto banks by offering better returns to customers and promising that it is less risky. than.
Celsius allows users to deposit their Bitcoin, Ethereum and Tether and receive weekly interest payments. Depending on the period and the token, the eponymous platform offers an interest rate of 18% a year. Celsius said 1.7 million people have called “Celsius their home for crypto.”
Recent media investigations have discovered that Celsius bet heavily on untested projects to lend to major crypto companies. As demand for new loans from institutional investors began to decelerate last year, Celsius took on even greater risk, Financial Times fourth report.
A few days before Celsius blocked its customers from withdrawing and transferring their assets, Mashinsky questioned skeptics on Twitter and accused them of spreading “FUD,” which implies fear, uncertainty, and suspicion. doubt.
“The beauty of what C manages to do is we make a profit, we pay it to people who could never do it themselves, we take it from the rich and we beat the index . That’s like going to the Olympics and winning 15 medals in 15 different fields,” he said in a video streamed in December.
The fall of degrees Celsius entailed a similar fate for many digital lenders, many of which were toppled by the collapse of crypto hedge fund Three Arrows Capital, also filed for bankruptcy this monthand Terraform Labs ‘Luna and its sister UST token. Voyager Digital, a well-known cryptocurrency broker, also filed for bankruptcy in the first day of this month.
Celsius, which counts WestCap and Caisse de Đépôt et position du Québec among its backers and raised more than $850 million from investors, said it did not ask the authority to continue withdrawing funds. customer at this time.
“To ensure a smooth transition to Chapter 11, Celsius has submitted to the Court a series of customary motions to allow the Company to resume normal operations. These ‘first day’ motions include requests to pay employees and continue their benefits without interruption, which the Company expects to receive approval from the Court. Celsius does not require the authority to allow customers to withdraw funds at this time. Customer complaints will be resolved through the Chapter 11, Celsius . process speak in a press release.
