According to data from Coinmarketcap, Celsius‘ ($CEL) market capitalization has plunged by 85.84% in 2022, falling from a market worth of $1.06 billion on January 1 to $0.15 billion on July 14. The token is also down 90.22% from its ATH of $8.02 in June 2021 to sit below $1 at $0.79.
Following the continued crash on the crypto lending platform, Celsius, investors are incurring massive losses on the platform’s token. The turmoil has contributed to its native token $CEL recording significant capital outflows.
Following the debacle, investors have come out to share their experiences as the company’s troubles accelerate. Some are claiming that they have lost life savings that they have invested in Celsius.
A bit of background
Although the company had assured users that it was working on restoring normal operations, the company announced that it is filing for Chapter 11 bankruptcy in the early hours of yesterday.
Chapter 11 is a provision of US bankruptcy law that allows companies to conduct a debt restructuring following a major financial failure. This means that the company in its current state does not have sufficient funds to repay all of its debts to its creditors, including its users, and will therefore be forced to restructure its debt presumably by negotiating with its creditors.
In a statement, the company noted it has resorted to applying for Chapter 11 bankruptcy protection while assuring investors it is working to stabilize the business.
Founder Alex Mashinsky said:
“This is the right decision for our community and company. 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,”
According to the release, Celsius currently holds $167 million in cash and plans to continue operating, noting that the firm held $20 billion in assets under management at its peak. But following the downturn of the crypto market, it suffered from a liquidity crisis.
Celsius woes have also been compounded by a lawsuit filed last week by the company’s former employee, who claimed the business was a Ponzi scheme that lacked enough protection measures for customer deposits.
Notably, Celsius became the third crypto lender to file for bankruptcy within a month following Voyager and Three Arrows Capital who have sought bankruptcy protection amid volatile market conditions.
A tale of woes
Following the update, many Celsius customers and investors have taken to social media to share their woes. On a subreddit page dedicated to the company, one of the top posts features a list of suicide hotline numbers.
In a thread titled “I am suicidal,” one user shared their troubles hours after Celsius posted its announcement:
“I had all of my savings I’ve been building for 20 years in Celsius. I don’t know what to do. I have my 2nd child on the way and a mortgage to pay for…My wife has no idea. I am so scared on what to do. I am thinking of just ending it. It would be easier than suffering through this major loss. My whole life. Gone. I don’t know where to go or what to do.”
Also, Celsius’ Twitter announcement was treated with multiple responses from customers claiming they have lost access to their life savings since the firm halted withdrawals.
One user tweeted:
“I’m a single mother. This will change the path of my life. I feel sick”
“Can anybody let me borrow a rope, please? Celsius just filed bankruptcy for me too,”
There are other reactions in the announcement which show how people lost everything.
Following the freeze on withdrawals and the consequent bankruptcy application, the fate of the affected investors is further complicated by uncertainty regarding when normal operations will resume.
With users incurring losses, Celsius has not explored the option of unfreezing customer funds with the company stating that the move will likely result in further losses for unsecured creditors.
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