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Crypto lender Genesis Trading files for bankruptcy protection
Barry Silbert, Founder and CEO, Digital Currency Group
David A. Grogan | CNBC
Crypto lender Genesis filed for Chapter 11 bankruptcy protection late Thursday night in Manhattan federal court, the latest casualty in the industry contagion caused by the collapse of FTX and a crippling blow to a business once at the heart of Barry Silbert’s Digital Currency Group.
The company listed over 100,000 creditors in a “mega” bankruptcy filing, with aggregate liabilities ranging from $1.2 billion to $11 billion dollars, according to bankruptcy documents.
Three separate petitions were filed for Genesis’ holding companies. In a statement, the company noted that the companies were only involved in Genesis’ crypto lending business. The company’s derivatives and spot trading business will continue unhindered, as will Genesis Global Trading.
“We look forward to advancing our dialogue with DCG and our creditors’ advisors as we seek to implement a path to maximize value and provide the best opportunity for our business to emerge well-positioned for the future,” Genesis interim CEO Derar Islim said in a statement.
The filing follows months of speculation over whether Genesis would enter bankruptcy protection, and just days after the Securities and Exchange Commission filed suit against Genesis and its onetime partner, Gemini, over the unregistered offering and sale of securities.
Genesis listed a $765.9 million loan payable from Gemini in Thursday’s bankruptcy filing. Other sizeable claims included a $78 million loan payable from Donut, a high-yield, decentralized platform, and a VanEck fund, with a $53.1 million loan payable.
Gemini co-founder Cameron Winklevoss initially responded to the news on Twitter, writing that Silbert and DCG “continue to refuse to offer creditors a fair deal.”
“We have been preparing to take direct legal action against Barry, DCG, and others,” he continued.
“Sunlight is the best disinfectant,” Winklevoss concluded.
Genesis is in negotiations with creditors represented by law firms Kirkland & Ellis and Proskauer Rose, sources familiar with the matter told CNBC. The bankruptcy puts Genesis alongside other fallen crypto exchanges including BlockFi, FTX, Celsius, and Voyager.
FTX’s collapse in November put a freeze on the market and led customers across the crypto landscape to seek withdrawals. The Wall Street Journal reported that, following FTX’s meltdown, Genesis had sought an emergency bailout of $1 billion, but found no interested parties. Parent company DCG, which owes creditors a mounting debt of more than $3 billion, suspended dividends this week, CoinDesk reported.
The crypto contagion
Genesis provided loans to crypto hedge funds and over-the-counter firms, but a series of bad bets made last year severely damaged the lender and forced it to halt withdrawals on Nov. 16.
The New York-based firm had extended crypto loans to Three Arrows Capital (3AC) and Alameda Research, the hedge fund started by Sam Bankman-Fried and closely linked to his FTX exchange.
3AC filed for bankruptcy in July in the midst of the “crypto winter.” Genesis had loaned over $2.3 billion worth of assets to 3AC, according to court filings. 3AC creditors have been fighting in court to recover even a sliver of the billions of dollars that the hedge fund once controlled.
Meanwhile, Alameda was integral to FTX’s eventual demise. Bankman-Fried has repeatedly denied knowledge of fraudulent activity within his web of companies, but remains unable to provide a substantial explanation for the multibillion-dollar hole. He was arrested in December, and is released on a $250 million bond ahead of his trial, which is set to begin in October.
Genesis had a $2.5 billion exposure to Alameda, though that position was closed out in August. After FTX’s bankruptcy in November, Genesis said that about $175 million worth of Genesis assets were “locked” on FTX’s platform.
Genesis’ financial spiral has exposed Silbert’s broader DCG empire. The parent company was forced to take over Genesis’ $1 billion liability stemming from 3AC’s collapse. In a later letter to investors, Silbert disclosed an additional $575 million loan from Genesis to DCG for undisclosed investing purposes.
DCG pioneered publicly traded trusts, allowing investors to hold bitcoin and other currencies in their portfolio without direct exposure. Grayscale Bitcoin Trust’s discount to net asset value widened significantly last year as confidence in the conglomerate waned.
This is a developing story. Please check back for updates.
Crypto lender Genesis preparing to file for bankruptcy, Bloomberg News reports
Jan 18 (Reuters) – Cryptocurrency lender Genesis Global Capital is planning to file for bankruptcy as soon as this week, Bloomberg News reported on Wednesday, citing people with knowledge of the situation.
A bankruptcy filing has been expected for weeks, after the company froze customer redemptions on Nov. 16 following the downfall of major cryptocurrency exchange FTX.
The collapse of FTX in November has claimed several victims including crypto lender BlockFi and Core Scientific Inc , one of the biggest publicly traded crypto mining companies in the United States, both of which filed for bankruptcy protection in the following months.
Genesis, its parent Digital Currency Group and creditors have exchanged several proposals, but have so far failed to come to an agreement, the Bloomberg report said, adding that Kirkland & Ellis and Proskauer Rose have been advising groups of creditors.
Genesis did not immediately respond to a Reuters request for comment.
Genesis is also locked in a dispute with Gemini, founded by the identical twin crypto pioneers Cameron and Tyler Winklevoss.
Gemini offered a crypto lending product called Earn in partnership with Genesis, and now says Genesis owes it $900 million in connection with that product.
The U.S. Securities and Exchange Commission last week said it had charged Genesis and Gemini with illegally selling securities to hundreds of thousands of investors through their crypto lending program.
Reporting by Niket Nishant and Mehnaz Yasmin in Bengaluru; Editing by Sriraj Kalluvila
Our Standards: The Thomson Reuters Trust Principles.
Genesis bankruptcy filings – latest: Crypto lender to file for bankruptcy amid ‘major’ DoJ move
Crypto Outlook at The World Economic Forum
Cryptocurrency firm Genesis Global Capital is planning to file for bankruptcy as early as this week, Bloomberg reported today.
The bankruptcy filing has been expected since the November fall of the FTX cryptocurrency exchange.
Meanwhile, the US Justice Department has announced that Anatoly Legkodymov, the Russian operator of the China-based crypto exchange Bitzlato, has been arrested. Bitzlato was a crypto exchange that allegedly worked with the darknet blackmarket Hydra Market, which dealt in illicit trade and served as a safe haven for ransomware attackers, according to the DOJ.
The US Justice Department issued a vague statement on Wednesday that it would “announce a major, international cryptocurrency enforcement action”, and noted that the US Treasury Department would also be making its own statement.
The announcement comes at a time when former FTX crypto exchange CEO Sam Bankman-Fried is facing charges of wire fraud, securities fraud, and conspiracy. The DOJ stressed that criminals using the crypto space for scams and other criminal activity should be aware the agency will use “every tool” to crack down on their activities.
Mr Bankman-Fried’s company – long considered one of the biggest crypto exchanges alongside Binance – declared bankruptcy after allegedly using, and losing, customers’ funds as investment capital.
Crypto companies scale back Davos visibility after year of losses, scandals
In recent years, crypto companies have dominated the promenade at the Davos World Economic Forum, but this year they appear to have scaled back their visibility, CNBC reports.
With the exception of a lone, flash orange crypto-advertising sports car, crypto company advertisements were reportedly far less prominent this year.
An NFT shop that was selling digital tokens alongside images closed up this year after prices for the assets dropped significantly in 2022.
Cliff Sarkin, chief of strategic relations at Casper Labs, told the outlet that the remaining crypto businesses at Davos are “subtantive projects” and “the real deals.”
Graig Graziosi19 January 2023 07:00
FBI says it will ‘relentlessly’ pursue crypto criminals
FBI Assistant Deputy Director Brian Turner said the law enforcement agency would “relentlessly pursue” criminals acting in the crypto space following the arrest of Bitzlato crypto exchange founder Anatoly Legkodymov.
“The FBI will continue to pursue actors who attempt to mask their criminal activity behind keyboards and use means such as cryptocurrency to evade law enforcement,” he said, according to the DOJ. “We, along with our federal and international partners, will work relentlessly to disrupt and dismantle these types of criminal enterprises. Today’s arrest should serve as a reminder the FBI will impose risk and consequences upon those who engage in these activities.”
Mr Legkodymov, a Russian national living in China, was arrested in Miami on Wednesday.
Graig Graziosi19 January 2023 06:00
Financial leaders at Davos World Economic Forum bash crypto, insist traditional institutions are safe
Several financial leaders speaking at the Davos World Economic Forum made clear they did not trust cryptocurrencies, and insisted to attendees that traditional investment and banking institutions were still safe to use.
Senior Minister Tharman Shanmugaratnam of Singapore said that crypto assets were “slightly crazy,” eliciting a laugh from the audience, according to Iris Market IQ.
UBS Chairman Colm Kelleher said that regulators had faltered in their ability to police “non-bank” entities, which includes cryptocurrencies.
“Regulators have — with respect — taken their eyes off the ball in terms of the non-banking sector,” Mr Kelleher said, according to Reuters.
European Central Bank Governing Council member Francois Villeroy de Galhau agreed, saying “we should rush to some urgent non-bank regulation starting with cryptos.”
Graig Graziosi19 January 2023 04:59
DOJ says Bitzlato head was aware Hydra transactions were illicit, customers were ‘known to be crooks’
The Department of Justice claimed that Bitzlato’s founder, Anatoly Legkodymov, was aware of the illicit nature of Hydra Market transactions, and knew that its users were using false identities while making transactions.
“Bitzlato’s customers routinely used the company’s customer service portal to request support for transactions with Hydra, which Bitzlato often provided, and admitted in chats with Bitzlato personnel that they were trading under assumed identities,” the DOJ said. “Moreover, Legkodymov and Bitzlato’s other managers were aware that Bitzlato’s accounts were rife with illicit activity and that many of its users were registered under others’ identities.”
According to internal chat logs obtained by the DOJ, Mr Legkodymov wrote to a colleague that their customers were “known to be crooks.” Officials at Bitzlato reportedly warned the founder that its users were “addicts who buy drugs [at Hydra]” and “drug traffickers.”
Graig Graziosi19 January 2023 04:00
ICYMI: Crypto market cap hit $1 trillion briefly before diving
Earlier today the crypto market cap touched $1 trillion for the first time since November, just before 2022’s mass sell-off and FTX collapse.
It’s unclear if the drop was the result of the DOJ’s announcement, or due to traders selling at the higher price, or both.
Despite the drop, Bitcoin has remained popular among investors, gaining 30 per cent this year.
Graig Graziosi19 January 2023 03:00
What was ‘Hydra Market’ ?
What was ‘Hydra Market,’ the darknet black market that was one of Bitzlato’s largest customers?
According to the Department of Justice, Hydra Market is “an anonymous, illicit online marketplace for narcotics, stolen financial information, fraudulent identification documents, and money laundering services that was the largest and longest running darknet market in the world.”
“Hydra Market users exchanged more than $700 million in cryptocurrency with Bitzlato, either directly or through intermediaries, until Hydra Market was shuttered by U.S. and German law enforcement in April 2022,” the DOJ wrote. “Bitzlato also received more than $15 million in ransomware proceeds.”
Graig Graziosi19 January 2023 02:00
ICYMI: Bitcoin price plummets amid major DOJ crypto announcement
The price of bitcoin has fallen by 5 per cent in the space of an hour after the US Department of Justice announced plans to introduce major international cryptocurrency enforcement action.
The world’s leading crypto dropped from $21,500 to around $20,500, reversing an upward trend that had seen its price rise by nearly a third since the start of the year.
Read more from The Independent’s Anthony Cuthbertson in his story below…
Graig Graziosi19 January 2023 01:00
‘Dr Doom’ economist says ‘90 per cent of crypto is a scam’ at Davos
Dr Nouriel Roubini — who is sometimes called “Dr Doom” for his grim economic predictions — said that “literally 90 per cent of crypto is a scam” during the Davos World Economic Forum on Wednesday.
“FTX and SBF are not an exception — they’re a rule,” he said during a Yahoo Finance event.
He went on to predict a forthcoming bust.
“Literally 90% of crypto is a scam. A criminal activity,” he said. “A total real-bubble Ponzi scheme that is going bust.”
Graig Graziosi19 January 2023 00:00
ICYMI: Crypto crime network shut down in ‘significant blow’ to fraudsters, DOJ announces
The US Department of Justice has announced that it has dealt a “significant blow” to the crypto crime landscape after arresting a Russian national alleged to have founded a major criminal online platform.
Cryptocurrency exchange Bitzlato processed more than $700 million dollars’ worth of illicit funds, according to the DOJ, advertising its services to users who were “known to be crooks”.
Alleged founder Anatoly Legkodymov was arrested in Miami on Tuesday. Read more from The Independent’s Anthony Cuthbertson in his story below…
Graig Graziosi18 January 2023 23:00
Crypto exchange targeted by DOJ responding with ‘oops, sorry’ to customers on automated social media channel
Chinese-based cryptocurrency exchange Bitzlato — whose CEO Anatoly Legkodymov, was arrested by the DOJ in Miami on Tuesday — is responding to its customers through an automated message on Telegraph with the phrase “oops, sorry” along with a sad face emoji, according to NBC News.
The DOJ alleges the company frequently dealt with Hydra Market, an illicit digital marketplace and haven for ransomware attackers. The agency alleged that Mr Legkodymov was aware that his customers were involved in criminal activity and using aliases to hide their identities.
Graig Graziosi18 January 2023 21:30
Crypto exchange Gemini trying to recover $900 million from crypto lender Genesis, Financial Times reports
Dec 3 (Reuters) – Crypto broker Genesis and its parent company Digital Currency Group (DCG) owe customers of the Winklevoss twins’ crypto exchange Gemini $900 million, the Financial Times reported on Saturday.
Crypto exchange Gemini is trying to recover the funds after Genesis was wrongfooted by last month’s failure of Sam Bankman-Fried’s FTX crypto group, the newspaper said, citing people familiar with the matter.
Venture capital company Digital Currency Group, which owns Genesis Trading and cryptocurrency asset manager Grayscale, owes $575 million to Genesis’ crypto lending arm, Digital Currency Chief Executive Barry Silbert told shareholders last month.
Gemini, which runs a crypto lending product in partnership with Genesis, has now formed a creditors’ committee to recoup the funds from Genesis and its parent DCG, the report added.
Genesis and Gemini did not immediately respond to Reuters’ request for comment.
Genesis has hired investment bank Moelis & Company to explore options including a potential bankruptcy, the New York Times reported last month, citing three people familiar with the matter.
Genesis Global Capital suspended customer redemptions in its lending business last month, citing the sudden failure of crypto exchange FTX.
Crypto trading platform FTX filed for bankruptcy protection in the United States on Nov. 11 in the highest-profile crypto blowup to date, after traders pulled billions from the platform in three days and rival exchange Binance abandoned a rescue deal.
Reporting by Shubhendu Deshmukh and Rhea Binoy in Bengaluru; Editing by Toby Chopra and Christina Fincher
Our Standards: The Thomson Reuters Trust Principles.
Crypto lender BlockFi files for bankruptcy, cites FTX exposure
Nov 28 (Reuters) – Cryptocurrency lender BlockFi has filed for Chapter 11 bankruptcy protection, it said on Monday, the latest crypto casualty after the firm was hurt by exposure to the spectacular collapse of the FTX exchange earlier this month.
The filing in a New Jersey court comes as crypto prices have plummeted. The price of bitcoin , the most popular digital currency by far, is down more than 70% from a 2021 peak.
“BlockFi’s Chapter 11 restructuring underscores significant asset contagion risks associated with the crypto ecosystem,” said Monsur Hussain, senior director at Fitch Ratings.
New Jersey-based BlockFi, founded by fintech executive-turned-crypto entrepreneur Zac Prince, said in a bankruptcy filing that its substantial exposure to FTX created a liquidity crisis. FTX, founded by Sam Bankman-Fried, filed for protection in the United States earlier in November after traders pulled $6 billion from the platform in three days and rival exchange Binance abandoned a rescue deal.
“Although the debtors’ exposure to FTX is a major cause of this bankruptcy filing, the debtors do not face the myriad issues apparently facing FTX,” said the first day bankruptcty filing by Mark Renzi, managing director at Berkeley Research Group, the proposed financial advisor for BlockFi. “Quite the opposite.”
BlockFi said the liquidity crisis was due to its exposure to FTX via loans to Alameda, a crypto trading firm affiliated with FTX, as well as cryptocurrencies held on FTX’s platform that became trapped there. BlockFi listed its assets and liabilities as being between $1 billion and $10 billion.
Renzi said that BlockFi had sold a portion of its crypto assets earlier in November to fund its bankruptcy. Those sales raised $238.6 million in cash, and BlockFi now has $256.5 million in cash on hand.
In a court filing on Monday, BlockFi listed FTX as its second-largest creditor, with $275 million owed on a loan extended earlier this year. It said it owes money to more than 100,000 creditors. The company also said in a separate filing it plans to lay off two-thirds of its 292 employees.
Under a deal signed with FTX in July BlockFi was to receive a $400 million revolving credit facility while FTX got an option to buy it for up to $240 million.
BlockFi’s bankruptcy filing also comes after two of BlockFi’s largest competitors, Celsius Network and Voyager Digital , filed for bankruptcy in July citing extreme market conditions that had resulted in losses at both companies.
Crypto lenders, the de facto banks of the crypto world, boomed during the pandemic, attracting retail customers with double-digit rates in return for their cryptocurrency deposits.
Crypto lenders are not required to hold capital or liquidity buffers like traditional lenders and some found themselves exposed when a shortage of collateral forced them – and their customers – to shoulder large losses.
BlockFi’s first bankruptcy hearing is scheduled to take place on Tuesday FTX did not respond to a request for comment.
CREDITOR LIST
BlockFi’s largest creditor is Ankura Trust, a company that represents creditors in stressed situations, and is owed $729 million. Valar Ventures, a Peter Thiel-linked venture capital fund, owns 19% of BlockFi equity shares.
BlockFi also listed the U.S. Securities and Exchange Commission as one of its largest creditors, with a $30 million claim. In February, a subsidiary of BlockFi agreed to pay $100 million to the SEC and 32 states to settle charges in connection with a retail crypto lending product the company offered to nearly 600,000 investors.
Bain Capital Ventures and Tiger Global co-led BlockFi’s March 2021 funding round, according to a press release issued by BlockFi at the time. Both firms did not immediately respond to a request for comment.
In a blog post, BlockFi said its Chapter 11 cases will enable the company to stabilize its business and maximize value for all stakeholders.
“Acting in the best interest of our clients is our top priority and continues to guide our path forward,” BlockFi said.
In its bankruptcy filing, BlockFi said it had hired Kirkland & Ellis and Haynes & Boone as bankruptcy counsel.
BlockFi had earlier paused withdrawals from its platform.
In a filing, Renzi said that Blockfi intends to seek authority to honor client withdrawal requests from its customer wallet accounts, in which crypto assets are held in custody. However, the company did not disclose its plans for how it might treat withdrawal requests from its other products, including its interest-bearing accounts.
“BlockFi clients may ultimately recover a substantial portion of their investments,” Renzi said in the filing.
ORIGINS
BlockFi was founded in 2017 by Prince, who is currently the company’s chief executive officer, and Flori Marquez. Though headquartered in Jersey City, BlockFi also has offices in New York, Singapore, Poland and Argentina, according to its website.
In July, Prince had tweeted that “it’s time to stop putting
BlockFi in the same bucket / sentence as Voyager and Celsius.”
“Two months ago we looked the ‘same.’ They shut down and have impending losses for their clients,” he said.
According to a profile of BlockFi published earlier this year by Inc, Prince was raised in San Antonio, Texas, and financed his college education at the University of Oklahoma and Texas State University with winnings from online poker tournaments. Before starting BlockFi with Marquez, he held jobs at Orchard Platform, a broker dealer, and at Zibby, a lease-to-own lender now called Katapult (KPLT.O).
Marquez previously worked at Bond Street, a small business lending outfit that was folded in to Goldman Sachs (GS.N) in 2017, according to Inc.
Reporting by Hannah Lang in Washington, Niket Nishant and Manya Saini in Bengaluru and Elizabeth Howcroft in London
Additional reporting by Dietrich Knauth, Editing by Megan Davies, Conor Humphries, Matthew Lewis and Anna Driver
Our Standards: The Thomson Reuters Trust Principles.
Crypto lender Genesis says no immediate plans to file for bankruptcy
Nov 21 (Reuters) – Cryptocurrency lender Genesis said on Monday it has no immediate plans to file for bankruptcy, days after the collapse of crypto exchange FTX forced it to suspend customer redemptions.
“We have no plans to file bankruptcy imminently. Our goal is to resolve the current situation consensually without the need for any bankruptcy filing,” a Genesis spokesperson said in an emailed statement to Reuters, adding that it continues to have conversations with creditors.
A report from Bloomberg News, citing sources, said Genesis was struggling to raise fresh cash for its lending unit, and warning investors it may need to file for bankruptcy if it does not find funding.
Also, the Wall Street Journal reported, citing sources that the company approached crypto exchange Binance seeking an investment but Binance decided against it, fearing a conflict of interest down the line.
Genesis also approached private equity firm Apollo Global Management (APO.N) for capital assistance, according to the report.
Apollo did not immediately respond to a Reuters request for comment on the WSJ report, while Binance declined to comment.
Last week, Genesis Global Capital suspended customer redemptions in its lending business, citing the sudden failure of Sam Bankman-Fried’s crypto exchange FTX.
Crypto exchange Gemini, which runs a crypto lending product in partnership with Genesis, tweeted on Monday that it was continuing to work with the company to enable its users to redeem funds from its yield-generating “Earn” programme.
In a statement on its blog last week, Gemini said there was no impact on its other products and services after Genesis paused withdrawals.
On Thursday, the Wall Street Journal reported that Genesis had sought an emergency loan of $1 billion from investors before it suspended withdrawals.
Earlier this month, FTX filed for U.S. bankruptcy protection in the highest-profile crypto blowup to date, after traders pulled billions from the platform in three days and rival exchange Binance abandoned a rescue deal.
Reporting by Manya Saini and Lavanya Sushil Ahire in Bengaluru; Additional reporting by Rishabh Jaiswal; Editing by Sriraj Kalluvila, Rashmi Aich and Sam Holmes
Our Standards: The Thomson Reuters Trust Principles.
Singapore-based crypto lender Hodlnaut suspends withdrawals
Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, February 14, 2018. REUTERS/Dado Ruvic/Illustration/File Photo
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HONG KONG, Aug 8 (Reuters) – Hodlnaut, a Singapore-based crypto currency lender and borrower, has suspended withdrawals, swaps and deposits, the company said on Monday, the latest sign of stress in the cryptocurrency industry.
The crypto lender also said it would withdraw its application for a licence from the Monetary Authority of Singapore (MAS) to provide digital token payment services, for which it received in principle approval in March.
An MAS spokesperson said it had rescinded the approval following the request.
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Hodlnaut said the move was “due to recent market conditions” and was “to focus on stabilising our liquidity and preserving assets”.
The company is the latest in a string of crypto players globally to run into difficulties following a sharp sell off in markets that started in May with the collapse of two paired tokens, Luna and TerraUSD. read more
Other high profile failures include U.S. crypto lender Celsius, and Singapore-based fund Three Arrows Capital, both of which filed for bankruptcy last month. read more
Hodlnaut was named as one of Celsius’ institutional clients, according to court filings.
Singapore, a major centre for crypto and blockchain in Asia, has seen several crypto companies run into difficulties in recent months. read more
Vauld, a Singapore-based crypto lending and trading platform, suspended withdrawals in early July, and later that month, Zipmex, a Southeast Asia-focused crypto exchange, suspended withdrawals, though has since resumed them for some products. read more
“Digital payment token service providers licensed by MAS under the (Payment Services) Act are regulated for money laundering and terrorism financing risks as well as technology risks. They are not subject to risk-based capital or liquidity requirements, nor are they required to safeguard customer monies or digital tokens from insolvency risk,” said an MAS spokesperson.
They said this was a reason why “MAS has been continually reminding the general public that dealing in cryptocurrency is highly hazardous,” and added spillover to Singapore’s domestic financial system from the recent turmoil in the cryptocurrency market has been “very limited”
Hodlnaut did not respond to a request for comment.
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Reporting by Alun John in Hong Kong, Chen Lin in Singapore and Elizabeth Howcroft in London; Editing by Toby Chopra and Louise Heavens
Our Standards: The Thomson Reuters Trust Principles.
Major crypto lender Celsius files for bankruptcy
July 13 (Reuters) – U.S. crypto lender Celsius Network said on Wednesday it had filed for bankruptcy in New York, becoming the latest victim in the cryptocurrency sector of a dramatic plunge in token prices.
New Jersey-based Celsius froze withdrawals last month, citing “extreme” market conditions, cutting off access to savings for individual investors and sending tremors through the crypto market.
In a court filing at the U.S. Bankruptcy Court for Southern District of New York, Celsius estimated its assets and liabilities as between $1 billion to $10 billion, with more than 100,000 creditors. The company has $167 million in cash on hand.
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“This is the right decision for our community and company,” said Celsius co-founder and Chief Executive Alex Mashinsky.
Crypto lenders such as Celsius boomed during the COVID-19 pandemic, drawing depositors with high interest rates and easy access to loans rarely offered by traditional banks. They lent out tokens to mostly institutional investors, making a profit from the difference.
But the lenders’ business model came under scrutiny after a sharp sell-off in the crypto market spurred by the collapse of major tokens terraUSD and luna in May.
Another U.S. crypto lender, Voyager Digital Ltd (VOYG.TO), filed for bankruptcy this month after suspending withdrawals and deposits. Singapore’s Vauld, a smaller lender, also froze withdrawals this month. read more
Celsius said in a statement it was not requesting authority to allow customer withdrawals, adding it had asked the court to allow it to continue operations such as paying employees.
Celsius’s move in June to freeze withdrawals prompted state securities regulators in New Jersey, Texas and Washington to launch investigations into the firms. read more
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Reporting by Maria Ponnezhath in Bengaluru; Editing by Sherry Jacob-Phillips and Edmund Blair
Our Standards: The Thomson Reuters Trust Principles.