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Celsius Network Files Chapter 11 Bankruptcy

Celsius Network files Chapter 11 bankruptcy

Celsius Network (“Celsius”) is a cryptocurrency company, unlicensed in Vermont, that offers its customers interest-bearing crypto accounts.  On June 12, 2022, Celsius announced it was pausing all withdrawals, swaps, and transfers between customer accounts.  On July 13, 2022, Celsius and several of its affiliates commenced voluntary Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court for the Southern District of New York.  Chapter 11 is a type of bankruptcy designed to allow insolvent companies to restructure their financial obligations, through reorganization, sale or otherwise.

Public filings are available through a portal accessible at: https://cases.stretto.com/Celsius. It is possible (and easy) to register on that site to receive email updates regarding future court filings.

Very few cryptocurrency companies have filed bankruptcy proceedings to date in the United States. As a result, there is little law on how digital assets will be treated in a bankruptcy proceeding and whether or not account holders will be able to sell or get back their cryptocurrency assets.  

Account holders of Celsius granted the company the right to use, lend, sell, and rehypothecate their deposited cryptocurrencies.  Celsius, in turn, deployed such assets in a variety of investments, trading, and lending activities.

Investors in Celsius may wish to consult with their own counsel about how the bankruptcy proceeding will affect their rights and the value of their investment in Celsius.    

The Department will monitor the bankruptcy proceedings and will provide updated alerts when important developments occur.   

For Vermont residents, if you have questions or wish to file a complaint, please contact the Department.  You may file a complaint through the Securities division section of the Department’s web site at https://dfr.vermont.gov/consumers/file-complaint/securities.