“Celsius, the crypto loan company, is filing for bankruptcy in New York,” the headline announced on the home page of the British Financial Times. The headline comes a day after the veteran economic newspaper published a report following a comprehensive investigation into the company’s and senior executives ‘dealings with investors’ money: Investment Bank, adding that Celsius “has fallen victim to the liquidation sale of cryptocurrencies” following interest rate hikes.
The investigation includes interviews with a dozen former Celsius employees, clients, investors and industry executives, as well as an examination of internal documents, which reveal a picture embedded in a number of red flags.
■ The Israeli crypto company Celsius has filed for bankruptcy
■ FT investigation into the fall of Celsius: Gambling with customer money and dubious conduct with the company’s assets
■ An investment house lawsuit against the crypto company Celsius alleges Ponzi fraud
“Unfortunately, that was to be expected. It was to be expected. However, that does not stop our investigations. We will continue to investigate the company and act to protect its customers, even through its insolvency,” CNBC reported Joseph’s words Rotunda, director of enforcement at the Texas State Securities Council, on filing for Celsius’ bankruptcy.
The headline called Celsius “ready for battle” when it announced the company’s filing for bankruptcy and protection against its creditors: “The crypto company Celsius has begun the process of filing for bankruptcy under Chapter 11 after a month of turmoil,” it read. Chapter 11 is what is supposed to protect the company from its 100,000 creditors.
“The latest victim of a $ 2 trillion crash”
In Bloomberg, the opening paragraph described Celsius collapsing “the last victim of a $ 2 trillion crash that wiped out some of the industry’s biggest names and exposed hundreds of thousands of individual investors to sharp losses,” referring to the turmoil gripping the crypto market.
Bloomberg added that “bankruptcy proceedings can take some time to resolve. It is unclear whether Celsius ‘users will receive anything. Under its terms of service, the handling of its customers’ digital assets in the event of insolvency is ‘unregulated’ and ‘unsecured’. “Which could cause its customers to be considered unsecured creditors.” In Bloomberg the submission documents were added alongside a graph describing the distribution of Celsius’ creditors.
“The filing of Chapter 11 in New York follows weeks of market speculation about Celsius, which has built itself into one of the largest lenders in the credo market, claiming it is less risky than a bank and has better returns for its customers. “Which provided large loans backed by few collateral, leaving it with little protection in the event of a market decline,” the Wall Street Journal explained.
And CNN added that “Celsius is not seeking authority to attract customers at this time,” the company said in a press release on Wednesday, adding that it has filed a series of petitions in court to allow it to continue operating normally. The company has $ 167 million. Cash, which will provide liquidity to support certain actions during the reorganization process. “
All media outlets commented that they had not received a response to Celsius’ response, but brought the official statement of Alex Mashinsky, co-founder and CEO of the company: “This is the right decision for our community and society. “I am sure that when we look back at the history of Celsius, we will see it as a founding moment, where action with determination and confidence has served the community and strengthened the future of society.”
All the media outlets covering the case of Celsius also give the background to the event and refer to the market conditions in which it takes place: “This year’s crypto market collapse rolled between intertwined and peaceful crypto companies. Another crypto lender, Voyager Digital, also sought raid protection. Last week, facing a large number of customer withdrawals, after Celsius froze its accounts and a $ 650 million crypto loan that went awry.