Celsius Network files for bankruptcy amid $4 billion user debt
UK-based Celsius Network, a crypto lending platform, has filed for bankruptcy and revealed that it owes £4bn to its users as a result of a $1.2 billion hole in its balance sheet. Celsius blamed rampant inflation, war in Ukraine, the collapse of several other crypto funds, and increased reluctance to do business with firms holding crypto assets. As a result, users began withdrawing their digital assets from Celsius’ platform at a rapid pace, leaving the company unable to meet its obligations. The bankruptcy filing comes after Voyager Digital and Three Arrows Capital also entered bankruptcy in the past three weeks.
Crypto business closures highlight losses and raise concerns
The company has promised to act quickly to generate ‘meaningful recoveries’ for stakeholders. Viktor Prokopenya, a London-based fintech investor, believes that central banks must act now to introduce the right regulation and support for crypto and ensure political stability before too much trust evaporates from the asset class.
Central banks urged to act to prevent wider asset class fallout
The news follows the growing trend of cryptocurrency firms entering bankruptcy in the past few weeks, with over $1tn wiped off the global crypto assets’ value in the past three months, as per CoinMarketCap data. Such an event could signal a 2008 style mortgage crisis or a 1930s ‘run on the bank’ if too many people try to cash in without the necessary collateral in place.
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