Celsius Network, one of the largest U.S. crypto lenders, filed for bankruptcy as a sequence of the recent cryptocurrency downfall.
The company implied this scenario with the decision to freeze all withdrawals from the platform in June 2022. They also put their social media QA sessions on pause.
Cause and Effect for Celsius Bankruptcy
As stated in court, the company has more than 500 000 depositors and owes money to more than 90 000 creditors. Celsius notes that it has $167 million in cash for supporting operations regarding its restructuring process and paying its employees.
Celsius, along with other crypto lenders, flourished during the Covid-19 pandemic. Riding the crypto hype wave, such companies offered loans one can hardly see in a traditional bank. One of the significant events that affected this business model was the crash of Terra and Luna in May 2022.
Another signal causing tremors to all crypto investors is the bankruptcy of Voyager Digital Ltd. This is another American-based crypto lender, which also firstly froze all deposits and withdrawals.
There are also other less significant players in the crypto lending business which could not make it through the current crypto decline.
These events caused U.S. regularity authorities to begin investigations into these companies.
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