Last Updated: 14 July 2022
Cryptobank, Celsius, has applied for a moratorium with the financial regulators. The company announced this in a press release. In America, this is done via a so-called Chapter 11 application, which is actually a last resort before bankruptcy. The Federal court in New York will now temporarily halt the claims of creditors.
Postponement of payment
Celsius is in financial trouble and currently cannot pay its creditors. The company says its assets on the company balance sheet are between $1 billion and $10 billion, quite a wide margin. But the outstanding debts, in their view, amount to roughly the same.
According to reports by “The Block,” which has found out about the application, the total number of creditors would be over 100,000. Pharos USD Fund SP and Pharos Fund SP are the largest creditors, together accounting for a claim of $81 million. Other named creditors include ICB Solutions, The Caen Group LLC, Alameda Research, B2C2, and Covario AG.
Celsius states that, it has $167 million in cash on its balance sheet. That should provide enough liquidity to pay current bills. Already eight companies affiliated with Celsius have declared bankruptcy.
'Cryptobank Celsius richting bankroet' https://t.co/HOuHaLDEwp
— Marcel Slootweg (@MarcelSlootweg) July 14, 2022
The cryptobank is a platform where consumers and companies can also receive interest on their deposited crypto assets. According to its own statement, the company had USD 10 billion in assets under management and 1.7 million customer accounts at the peak of its existence.
However, Celsius’ business model was loss-making, which meant that the promised returns to end customers were no longer feasible. In turn, Celsius had borrowed money from other crypto banks and could no longer meet its repayment obligations. Among other things, Celsius lost a lot of money in a short time due to the evaporation of ‘stablecoin’ TerraUSD and its token Luna.