Crypto lending platform Celsius has filed for Chapter 11 bankruptcy, with its lawyers starting to inform individual U.S. state regulators as of Wednesday, July 13. CNBC reported and referred to an anonymous source, who asked not to be named as the legal action was private. They said that the company planned to file the Chapter 11 paperwork “imminently.”
It comes just days after the embattled lending platform replaced its earlier hired law firm Akin Gump Strauss Hauer & Feld LLP with Kirkland & Ellis LLP, the same firm that aided Voyager Digital with its bankruptcy filing last week.
Celsius closed off the last of its DeFi debts owed to Compound, Aave, and Maker, earlier in the day, reducing its initial debt of $820 million to just $0.013 over the course of a month.
Still unknown, however, will be the fate of depositors who still have their assets locked up on the lending platform. Neither the company nor its CEO Alex Mashinsky has made any public comments about whether depositors will receive any percentage of their funds back.
Vermont’s Department of Financial Regulation (DFR) issued a warning against the troubled crypto lending firm, on Tuesday, prompting consumers that the firm is not licensed to offer its services in the state.
The DFR believed the company was “deeply insolvent” and doesn’t possess “assets and liquidity” to fulfill its responsibilities toward the customers, and accused them of mishandling customer funds by assigning them to risky investments.
Likes of Alabama, Kentucky, New Jersey, Texas, and Washington, Vermont has become the sixth state in America to open an investigation into Celsius’s crypto interest rate accounts, joining the
Reports of Celsius’ bankruptcy began mingling last month, on June 13, after the crypto lender was forced to halt withdrawals due to “extreme market conditions.”
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