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- The lender recently replaced its former attorneys with Kirkland & Ellis LLP, the same attorneys that handled Voyager’s bankruptcy filings.
- Celsius has reportedly resisted calls from his former lawyers to file for bankruptcy.
Flanked crypto lender Celsius has filed for bankruptcy after hearing advice from its former lawyers for US regulators.
To implement the restructuring, Celsius announced late Wednesday that it has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York, according to a company blog post.
“Celsius has embarked on a financial restructuring to stabilize its business and maximize value for all stakeholders,” the lender said in the post. “Our priority is to serve our stakeholders, including our entire customer community.”
CNBC first reported the news, citing a person familiar with the matter.
The lender said it intends to “develop a plan” to restore activity on the platform. Celsius stopped funding last month to do so, citing “extremely serious market conditions.” Most account activity will be on hold until further notice, Celsius said.
“Celsius is not currently requesting authorization to authorize customer withdrawals,” he said. Existing loans originated by Celsius affiliates will continue to be made and new loans are not currently expected to be made.
It’s the latest growth for the lender, which, at its peak, managed $11.8 billion in assets with around $8 billion in crypto loans to 1.7 million users as of May.
Celsius is said to have filed for bankruptcy on the advice of its own lawyers, which it claims will help it avoid the process entirely by asking users for support.
The New Jersey-based lender has replaced its former attorneys at Akin Gump Strauss Hauer & Feld LLP with new ones from Kirkland & Ellis LLP. Voyager, another troubled lender, is also using the same law firm.
A former cryptocurrency manager and ex-Celsius employee is suing the lender, alleging the firm misappropriated user funds to cover deficiencies in its lending business. That manager, Celsius, spent $61.2 million on liquidity, according to data from Arkham Intelligence.
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Sebastian Sinclair
Block works
Senior Reporter, Asia News Desk
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