Celsius, one of the largest crypto banks in the world, has filed for bankruptcy in a New York court, and is seeking protection from creditors under Chapter 11. Celsius has more than 100,000 creditors. The request comes a month after Celsius announced a moratorium on withdrawals and redemptions for its customers, then stressed that the move was made to allow it to meet its customer obligations, including interest rates of 15% -17% for deposits. Celsius seeks the protection in order to stabilize its business and maximize value for all stakeholders.
“Today’s submission follows Celsius’ difficult but necessary decision last month to suspend withdrawals, exchanges and transfers on its platform to stabilize its business and protect its customers,” Celsius noted.
Celsius ‘big problem is that she has leveraged customers’ deposits and invested in various illiquid investments, and a month ago, when customers started asking for their money, and actually started “running on the bank”, she did not have enough liquid money to return their money. Celsius explains the decision to freeze as follows: “Customers who were the first to withdraw their assets would receive full payment, leaving others with illiquid and less secure claims.”
Celsius founded by the Israelis Daniel Leon and Alex Mishinsky operates in the field of DeFI – distributed finance. This field claims to be the “new banking”, and so Celsius – the largest Israeli company operating in the field – has branded itself as a bank. It allows its customers to put money in a deposit and earn a return for them.
The money in the deposit is deposited in a “staking” mechanism – when the customer can lock the money for a longer period of time, and the return he will receive will be accordingly. The company promised a return of up to 17% per annum on locking the coins for several years. We emphasize that its customers can lock any currency in this mechanism, but benefits are given to those who operate in its currency, CEL.
Celsius
Line of Business: Engaged in crypto banking and allows deposits and loans. Issued the CEL currency
history: Founded in 2017 by Daniel Leon and Alex Mishansky
data: Has so far raised $ 3 billion in investment funds. Its currency has fallen 98% in the past year