.CelsiusNetwork has filed for Chapter 11 bankruptcy in New York – a move that will pit retail customers and sophisticated institutional creditors against each other as they fight to get their money back from the embattled lender. cheyenneligon reports
revealed that Celsius has a $1.2 billion hole in its balance sheet – the company has $5.5 billion in liabilities and only $4.3 billion in assets, much of which is illiquid. Though the company has already begun toto institutional creditors, retail investors have been left in the dark and will likely bear the brunt of Celsius’ failing.
Customers could connect their credit cards or bank accounts to the platform, and use it to buy and trade crypto, or to take out fiat loans against their crypto assets. To entice customers to stake their crypto with Celsius, the company promised returns of up to 17%.But, as several lawyers pointed out to CoinDesk, neither Celsius nor Voyager is a bank, and neither is subject to the same stringent regulations that banks are.
Rick Hyman, a New York-based partner in Crowell & Moring’s corporate and financial services groups, told CoinDesk that Celsius’ and Voyager’s ability to restructure through Chapter 11 rather than be forced to liquidate is a result of the lack of regulatory clarity surrounding cryptocurrencies. Aaron Javian, a partner at New York law firm Reed Smith, told CoinDesk it’s actually quite common for companies based outside New York to file for bankruptcy in the city.
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