Celsius Network Ltd. filed for bankruptcy, arguing that a restructuring will help the cryptocurrency lender stabilize and reorganize its operations as tokens like bitcoin sink to multiyear lows and investors take stock of the tangled web of connections between troubled cryptocurrency firms. Last month, Celsius abruptly halted all transactions and withdrawals among its nearly two million customers, citing “extreme market conditions.” The New Jersey-based company had long touted itself as “the world’s leading cryptocurrency earning and lending platform,” offering interest rates of up to 18 percent to depositors. Because of its early success, Celsius attracted major global investors, including Canadian pension fund Caisse de dépôt et placement du Québec, which invested $400 million as part of a funding round that valued Celsius at about $3 billion late last year year. In February, Celsius hired former Royal Bank of Canada CFO Rod Bolger as its finance chief after he left the bank last year. “As a proven leader in the space with significant support, liquidity and an incredibly exciting growth trajectory, I knew Kelsi was the right home for me,” Mr Bolger said in a post on the company’s blog. But late Wednesday, Kelsius filed for bankruptcy in New York, claiming it has $167 million in cash and values assets and liabilities of between $1 billion and $10 billion. The Caisse initially defended Celsius when the company suspended trading on June 13. “Celsius is taking proactive steps to honor its obligations to its customers and has honored its obligation to its customers to date,” spokeswoman Kate Monfette said. In an interview Thursday, Ms. Monfette declined to say whether the Caisse’s equity investment would be wiped out by Celsius’ bankruptcy proposal. He also declined to say whether this would affect future plans at the Caisse to invest in cryptocurrencies. “We are closely monitoring the matter and reviewing the files submitted by Celsius. We are unable to comment further at this time,” Ms Monfette told The Globe and Mail. Securities regulators in Vermont, Kentucky, New Jersey, Texas, Alabama and Washington confirmed Thursday that they are actively investigating Celsius, adding that the company’s insolvency does not hinder their investigations. The US Securities and Exchange Commission declined to comment. Celsius has not responded to repeated requests for comment, prompting speculation about what exactly prompted the company to freeze its customers’ accounts. “This is the right decision for our community and company,” Alex Mashinsky, CEO of Celsius, said in Wednesday’s blog post. “I’m confident that when we look back on Celsi’s history, we’ll see it as a defining moment where acting with determination and confidence served the community and strengthened the company’s future.” Kelsi added that it is cash on hand “will provide ample liquidity to support certain operations during the restructuring process.” The company said it expects the court to approve its requests to pay its employees and continue their benefits without interruption. It remains unclear whether Celsius users will be able to withdraw any of their money from the platform. According to the company’s Terms of Service, Celsius states: “You expressly understand and acknowledge that the treatment of digital assets in the event of such insolvency proceedings is not settled, is not guaranteed, and may result in a number of outcomes that are impossible to reasonably foreseeable, including, but not limited to, your treatment as an unsecured creditor and/or the total loss of any and all digital assets reflected in your Celsius account, including those in a custodial wallet.” Celsius – which has more than 100,000 creditors – also says in its terms of service that if the company goes bankrupt, customers “may have no recourse or rights in relation to Celsius’ obligations”. Bitcoin is down more than 70 percent this year. It recently fell well below the psychologically important $20,000 level – hovering around $19,700 on Thursday. This price level is symbolic as it was roughly the peak of the 2017 cycle before the bottom fell out. Meanwhile, Ether, which is the second most popular cryptocurrency, has also traded below the symbolically important US$1,000 level in July. On Thursday, ether rose to around US$1,080. Your time is valuable. Deliver the Top Business Headlines newsletter to your inbox morning or night. Sign up today.
