After a month of possible power plays, Celsius, the stricken crypto yield platform, has finally filed for Chapter 11 bankruptcy. This allows the firm time to stabilise the business and allows it to implement a complete restructuring process.
Celsius issued a statement late yesterday, saying that it had $167 million in cash with which to continue operating and paying its employees. New directors David Barse, and Alan Carr, have been put in place, and Kirkland & Ellis will serve as legal counsel.
The company said in its statement:
“Today’s filing follows the difficult but necessary decision by Celsius last month to pause withdrawals, swaps, and transfers on its platform to stabilize its business and protect its customers.”
Alex Mashinsky, CEO, and co-founder of Celsius was quoted as saying:
“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.”
A lot of questions would likely be asked of Mashinsky as to how he allowed this popular company to arrive at this position, but perhaps non-disclosure agreements (NDAs) might prevent him from telling his side of the story.
At least the Chapter 11 filing will allow a full investigation of the actual position of Celsius now, and will certainly uncover the full size of the financial hole that has prompted the company to file for bankruptcy.
The question now remains as to how much of their deposits investors will be left with at the end of the due process. In mid-May the company reported that it had over $11 billion in assets, but poor risk management as it tried desperately to seek more yield, has meant that perhaps much of this figure would likely have disappeared.
However, the wider impact of the Celsius bankruptcy is that trust has been damaged, perhaps irreparably, and the dream that Mashinsky fostered among his fervent community of investors has probably been totally destroyed.
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