July 13 (Reuters) – U.S. crypto lender Celsius Network said it filed for bankruptcy in New York on Wednesday, becoming the latest victim in the cryptocurrency industry of a dramatic drop in token prices.
New Jersey-based Celsius froze withdrawals last month, citing “extreme” market conditions, cutting off access to savings for individual investors and sending tremors through the crypto market.
In a court filing in the U.S. Bankruptcy Court for the Southern District of New York, Celsius estimated its assets and liabilities at between $1 billion and $10 billion, along with more than 100,000 creditors. The company has $167 million in cash on hand.
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“This is the right decision for our community and company,” said Alex Mashinsky, Celsius co-founder and chief executive.
During the Covid-19 pandemic, crypto lenders like Celsius lured depositors with higher interest rates and easier access to loans that traditional banks rarely offer. They often offered tokens to institutional investors, profiting from the difference.
But the lenders’ business model has come under scrutiny after a sharp sell-off in the crypto market triggered by the collapse of major tokens TeraUSD and Luna in May.
Another American crypto lender is Voyager Digital Limited (VOYG.TO), filed for bankruptcy this month after suspending withdrawals and deposits. Singapore’s Vault, a smaller lender, also froze withdrawals this month. read more
Celsius said in a statement that it had not sought the authority to allow the customer to withdraw, asking the court to allow it to continue operations such as paying employees.
Celsius’ move to freeze the withdrawal in June prompted state securities regulators in New Jersey, Texas and Washington to launch investigations into the companies. read more
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Maria Ponnelam’s report in Bangalore; Editing by Sherry Jacob-Phillips and Edmund Blair
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