CEL crashed 50% after Celsius filed for bankruptcy and their decision will help the restructuring process, according to the company executives so let’s read more today in our latest altcoin news.
Celsius Network announced today that it launched a Chapter 11 bankruptcy protection with the southern District of New York and right after that, CEL crashed 50% and dumped to a new monthly low before recovering ground. According to Celsius, the need for bankruptcy protection will help the restructuring process. The co-founder Alex Mashinsky added:
“This is the right decision for our community and company. We have a strong and experienced team in place to lead Celsius through this process. 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.”
The Celsius Network was battling liquidity issues since June when the company stopped swaps, withdrawals, and transfers between accounts. In the past few weeks, the company paid off the debts to unlock users’ funds in different lending protocols like Compound and Aave. For example, the blockchain transaction associated with Celsius sent $81.5 million worth of USDC to the Aave protocol. As a result, the company was able to access $410 million worth of stETH so while the lender continued its restructuring process, various global jurisdictions led by other US states started investigating it. The Director of Enforcement at the Texas State Securities Board Joseph Rotunda said:
“Unfortunately, this was expected. It was anticipated. It does not, however, stop our investigations. We will continue investigating the company and working to protect its clients, even through its insolvency.”
Speaking to CNBC, Adam Levitin who is a law professor, said that Celsius customers could have to wait for years before accessing their cash. He added that more crypto companies will follow the same path as Celsius in the near future:
“The tide is still going out, we’re just waiting to see how far it goes.”
The company has $167 million in cash right now which will help its restructuring process but it is worth noting that Kirkland and Ellis LLP is serving as their legal counsel.
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