According to reports, the cryptocurrency lending platform Celsius has filed for Chapter 11 bankruptcy, and its attorneys have begun notifying particular state regulators in the United States.
An American local media outlet reported the news and cited an anonymous source who wished to remain anonymous because the proceedings were secret. They stated that the business intended to file the necessary paperwork for Chapter 11 "imminently."
It happens only days after the troubled lending platform switched from the law firm Akin Gump Strauss Hauer and Feld LLP to Kirkland and Ellis LLP, the same company that helped Voyager Digital file for bankruptcy last week.
Earlier in the day, Celsius reduced its initial debt of $820 million to just $0.013 over the course of a month as it closed off the last of its decentralised finance (DeFi) obligations owing to Compound, Aave, and Maker.
However, it is still unclear what will happen to depositors whose assets are still held hostage on the lending platform. Regarding whether depositors will get any money back, neither the business nor its CEO Alex Mashinsky have made any public statements.
On Tuesday, the struggling crypto lending business was warned by Vermont's Department of Financial Regulation (DFR), which also reminded its users that the company lacks a licence to operate in the state.
The DFR also said that it believed the company was "seriously insolvent" and lacked the "assets and liquidity" necessary to meet its obligations to the clients, and it accused them of mismanaging consumer funds by allocating them to risky ventures.
