CEL Token Price Plunges 50% as Celsius Files for Bankruptcy
- Celsius files for Chapter 11 bankruptcy to allow for restructuring.
- The crypto lending firm has repaid some of its debts but still won’t reopen withdrawals.
- CEL token prices tanked 58% in a few hours following the announcement.
After a month of liquidity turmoil, the beleaguered crypto company Celsius has joined the ranks of several other prominent firms in filing for bankruptcy.
Late on July 13, the company announced that it had filed for Chapter 11 bankruptcy in New York while initiating a financial restructuring plan. Celsius claims to have $167 million in cash on hand, which will be used to provide liquidity to “support certain operations during the restructuring process.”
A Chapter 11 allows companies to continue operations while bankruptcy proceedings take place. On July 6, crypto brokerage Voyager Digital filed for a Chapter 11 as it conducts its restructuring.
— Celsius (@CelsiusNetwork) July 14, 2022
The “Right Decision”
Alex Mashinsky, co-founder and CEO of Celsius, said it was the “right decision for our community and company.” He added:
“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.”
However, the words come as little consolation to CEL token holders as prices have collapsed around 50% over the past 8 hours since the announcement.
Members of the Special Committee of the Board of Directors explained that the suspension of withdrawals was carried out to protect customers with longer-term investments.
Celsius filed “first-day” motions which included requests to pay employees and continue their benefits without disruption. However, this is down to a court decision. It did not request permission to allow customers to withdraw their funds at the time. The reaction on crypto Twitter was vehement, as expected.
According to the bankruptcy documents, Celsius has more than 100,000 creditors, with its largest unsecured claim of $81 million from the Caymans Island-based Pharos Fund.
The company stated that “existing loans originated by Celsius affiliates will continue to be serviced,” but it would not be issuing new loans at this time.
Celsius has made efforts to repay some of its debts to decentralized crypto lending platforms such as Maker. It had paid all of its Maker debt positions off between June 14 and July 7, freeing up its collateral in wrapped Bitcoin (WBTC). It has also started paying off debts to decentralized finance platforms, with $20 million USDC sent to Aave on July 11.
The moves come too little too late, however, as token holders are suffering again.
CEL Token Price Plunges
CEL token prices have tanked 58% over the past few hours from an intraday high of $0.96 to bottom out at $0.40 during the Thursday morning Asian trading session.
At the time of writing, CEL was trading at $0.53, having collapsed 95% from its June 2021 all-time high of $8.05.