Cryptocurrency trading and lending platform Celsius Network has filed for bankruptcy in the US a month after suspending transfers and withdrawals.
In a statement released on Wednesday, Celsius said it has assets and debts ranging from $1 billion (€10 billion) to $10 billion (€10 billion) due to the high volatility of cryptocurrencies.
Celsius, based in New Jersey, USA, admitted that it only has $167 million (€167 million) of liquidity to cover restructuring costs aimed at stabilizing the business and resuming normal operations.
Celsius offers interest-bearing products to clients who deposit cryptocurrencies into the platform and then lend digital assets to earn a profit.
The platform has over 1.7 million customers to whom it has paid out revenue that exceeds over 19% on some accounts.
On June 12, Celsius announced it was suspending all withdrawals and transfers between accounts in order to “meet withdrawal obligations in the long term,” citing “extreme market conditions.”
This is the second major crash in the cryptocurrency space in less than three months. The Terra cryptocurrency crashed in early May, causing fortunes to vanish in a matter of hours. So-called stable cryptocurrencies, as Earth was thought to be, were considered relatively safe as they had to be backed by hard assets such as coins or gold.
Like Earth, the Celsius platform represented a safe investment, in this case for cryptocurrency holders to deposit funds.
The cryptocurrency market, which reached all-time highs during the pandemic, has entered a recession this year. One of the most popular, bitcoin, closed the first half of the year with a loss of 72% of its value since November.
