Cryptocurrency lending firm, Celsius Network, has filed for bankruptcy protection a month after it controversially paused all withdrawals on its platform.

The embattled crypto firm seeks to go on with its lending operation as it files for Chapter 11 bankruptcy protection.

(Photo : JUSTIN TALLIS/AFP via Getty Images)
 An illustration picture taken in London on May 8, 2022, shows gold plated souvenir cryptocurrency Tether (USDT), Bitcoin and Etherium coins arranged beside a screen displaying a trading chart.

Crypto Lending Firm Celsius Files for Bankruptcy

As per the latest news story by The Verge, it has been a month ago since the crypto service, Celsius, suspended all of the transfers and withdrawals of its users.

This time, the crypto firm is looking to restructure its business as it has already started its process of filing for Chapter 11 bankruptcy protection.

According to the latest report by CNBC, the Chief Executive Officer (CEO) and founder of Celsius, Alex Mashinsky, says that "this is the right decision for our community and company."

The big boss of Celsius also shares that he is "confident that when we look back at the history of Celsius, we will see this as a defining moment."

Mashingky further adds that they could remember these trying times wherein they acted "with resolve and confidence served the community and strengthened the future of the company."

The Verge notes that the bankruptcy filing protection of Celsius reveals that its assets are around $1 billion to $10 billion.

It is worth noting that before the prices of crypto tokens massively slumped after the sell-off this year, Celsius Network owns roughly $24 billion in assets.

And after the massive crypto sell-off, approximately $12 billion worth of its assets have been wiped out before it decided to suspend the withdrawals of its users.

However, The Verge notes the bankruptcy filing now discloses that since Celsius halted its withdrawals and transfers, its assets have continued to go down in value.

The bankruptcy filing of Celsius further reveals that the crypto lending company has over 100,000 creditors, including lending counterparties and its customers.

One of its creditors in a $12 million unsecured loan is the trading firm of the CEO of FTX, Sam Bankman-Fried.

Read Also: Crypto Lender Celsius Stops Withdrawals, Transfers Amid Market Collapse

Celsius Pause Withdrawals

The giant crypto lending service now explains that it halted the withdrawals feature on its platforms in June to prevent a bank run from happening.

The latest press release of Celsius now says that if the crypto lending firm did not proceed to suspend its withdrawals, it would allow some customers to leave behind its other users without getting paid.

"It would have allowed certain customers-those who were first to act-to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery," the statement reads.

Related Article: Celsius Crypto Lending Platform Likened to 'Fraud,' 'Ponzi Scheme' in New York State Lawsuit

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Written by Teejay Boris