Celsius Network, amid a plunge in the value of bitcoin and ethereum, froze withdrawals and transfers in June.
Celsius Network, a New Jersey-based cryptocurrency lending platform that opened an office in Tampa last autumn, has filed for Chapter 11 bankruptcy, with its board of directors calling the move “a difficult but necessary decision,” according to a news release.
The company says it has $167 million in cash on hand and will continue to pay its 17 employees and provide benefits without disruption. Last month, in response to a severe downturn in the value of leading cryptocurrencies bitcoin and ethereum, Celsius Network suspended customers’ ability to make withdrawals and transfers on its platform.
“Without a pause,” the board states, in the release, “the acceleration of withdrawals 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.”
In February, Celsius Network co-founder Nuke Goldstein, who relocated from Israel to Tampa, appeared at the Synapse Summit at Amalie Arena in downtown Tampa, clad in a T-shirt that read, “Banks Are Not Your Friend.” During a panel discussion, he declared: “Your bank account is not safe — you don’t own your money. For 600 years, the banks taught us, ‘There is no alternative. There has to be someone in the middle that takes care of your money.’”
According to Celsius Network’s filings in U.S. Bankruptcy Court for the Southern District of New York, the company and its subsidiaries have more than 100,000 creditors and liabilities between $1 billion and $10 billion. With a claim of more than $81 million, its largest unsecured creditor is Pharos Fund, headquartered in the Cayman Islands.
“This is the right decision for our community and company,” Celsius Network CEO Alex Mashinsky states in the release. “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.”