After the tricky cryptocurrency lending business Celsius filed for bankruptcy and froze client withdrawals, investors continued to experience losses.
Following the withdrawals freeze and subsequent bankruptcy filing, investors have shared their experiences as the company’s problems intensify. For instance, some Celsius investors have lost their whole life investments.
Uncertainty surrounding when regular operations would return further complicates the situation of impacted investors. Celsius has voiced confidence about withdrawals, but recent occurrences dampen investor excitement.
The turmoil seems to have also led to CEL’s massive capital withdrawals. According to CoinMarketCap, CEL’s market value has decreased by 85.84% year-to-date in 2022, dropping from $1.06 billion on January 1 to $0.15 billion on July 14.
CEL market cap YTD. Source: CoinMarketCap
The token suffered severe losses despite Celsius holders’ efforts to boost its value to save the struggling enterprise.
For example, on July 4, CEL’s community involvement resulted in double gains.
Celsius increasing woes
The Celsius problems escalated at the beginning of last month when the company froze client withdrawals due to harsh market circumstances that hampered liquidity. Despite assuring consumers that it was striving to restore regular operations, the firm filed for bankruptcy on July 13 as the last option.
The firm said in a statement that it has filed for Chapter 11 bankruptcy while assuring investors that it is trying to stabilise the business.
“This is the right decision for our community and company. We have a strong and experienced team in place to lead Celsius through this process. 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 future of the company,” stated Alex Mashinsky, founder of Celsius.
Celsius keeps account freezes
Celsius has not studied the possibility of unfreezing client cash despite consumers sustaining losses, with the business claiming that such a move would likely result in more losses for unsecured creditors.
However, Finbold stated on July 7 that the firm repaid its Bitcoin loan in full despite customer money being frozen. The action seemed to revive investor optimism.
An ex-employee of Celsius has also filed a complaint against the firm, alleging that it was a Ponzi scheme that lacked adequate security mechanisms for consumer money.
Notably, Celsius became the third crypto company to file for bankruptcy in less than a month after another cryptocurrency lender, Voyager, filed for Chapter 11 bankruptcy protection due to huge losses. Moreover, Three Arrows Capital filed for bankruptcy in difficult market circumstances.