Celsius Files for Chapter 11 Bankruptcy Protection, Clears Debt with Compound

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Crypto lender Celsius Networks has filed for Chapter 11 bankruptcy protection, MarketWatch reported.

The embattled crypto lender has also repaid its remaining debt to the decentralized finance (DeFi) lending protocol Compound.

Celsius co-founder and Chief Executive Alex Mashinsky on Wednesday said the bankruptcy filing «is the right decision for our community and company.»

The embattled crypto lender made the filing in the U.S. Bankruptcy Court for the Southern District of New York.

«I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the company's future,» he said.

The bankruptcy filing makes it the latest victim in the cryptocurrency sector to collapse under a dramatic price plunge.

According to the court filing, the New Jersey-based crypto lender listed estimated assets and liabilities on a consolidated basis in the range of $1 billion to $10 billion.

Celsius had positioned itself in the market by promising more than 18% in interest to peoples' holdings who deposit their digital coins. The crypto lender, in turn, lent those coins out, Bloomberg reported.

Crypto lenders entered the market guns blazing during the COVID-19 pandemic as the digital market gained popularity and drew depositors with high-interest rates and easy access to loans that traditional banks rarely provide.

However, they have been experiencing a gradual downfall in recent months following a crash in cryptocurrency prices and the collapse of the major token TerraUSD in May.

Prior to filing for bankruptcy, the crypto lender had repaid its remaining debt to Compound, and in doing so, Celsius freed up nearly $200 million of