Celsius is filing for Chapter 11 bankruptcy, the company said Wednesday.
Word of its plans to seek bankruptcy, reportedly a point of contention between the company and its advisers in recent weeks, spread as it informed U.S. state regulators about its plans, CNBC reported, citing Joseph Rotunda, director of enforcement at the Texas State Securities Board, and other sources.
Celsius is among the major crypto companies that have reeled from a severe market crash that has sent the value of all cryptocurrencies falling sharply in the last seven months.
Celsius last month stopped withdrawals, swaps and transfers between accounts, citing the need to "stabilize its business and protect its customers," the company said in announcing its bankruptcy filing. The company was sued by a former asset manager who accused Celsius of mismanaging customer funds and failing to pay for its services.
“This is the right decision for our community and company,” Celsius CEO Alex Mashinsky said in a statement. “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.”
Six state regulators have also reportedly already begun investigations into Celsius. California regulators called on customers of crypto lenders who paused withdrawals to file complaints with the state's Department of Financial Protection and Innovation.
Crypto broker Voyager Digital also recently filed for bankruptcy protection a few days after suspending trading and announcing that crypto hedge fund Three Arrows Capital had defaulted on a loan. Three Arrows Capital is also undergoing liquidation in multiple jurisdictions, including a Chapter 15 filing in New York.