The price of the CEL token drops by 50% due to the failure of Celsius

CEL token price drops 50% due to Celsius failure - celsius network says its cel token face regulatory risk in latest disclosure minAfter a month of liquidity turmoil, beleaguered cryptocurrency firm Celsius has joined the ranks of many other prominent companies to file for bankruptcy.

On July 13, the company announced it had filed for Chapter 11 bankruptcy in New York, initiating a financial restructuring plan. Celsius says it has $ 167 million in cash, which will be used to provide liquidity to "support some operations during the restructuring process."

Chapter 11 allows companies to continue operating while bankruptcy proceedings are underway. On July 6, cryptocurrency brokerage Voyager Digital filed for Chapter 11 for its restructuring.

The "right decision"

Alex Mashinsky, co-founder and CEO of Celsius, said this is the "right decision for our community and for our company." And he added:

"I am sure that when we look back on the history of Celsius, we will see this as a defining moment, in which acting with determination and confidence has served the community and strengthened the future of the company."

However, the words are of little consolation for CEL token holders, as prices have plummeted by around 50% in the past 8 hours since the announcement.

The members of the Special Committee of the Board of Directors explained that the suspension of withdrawals was done to protect clients with long-term investments.

Celsius filed "day one" motions, including a demand to pay employees and continue their benefits without interruption. However, this depends on a court decision. He did not ask for permission to allow clients to withdraw their funds at that time. The reaction on Twitter was vehement, as expected.

According to bankruptcy documents, Celsius has more than 100.000 creditors, with the largest unsecured credit of $ 81 million from the Cayman-based Pharos Fund.

The company said "existing loans originating from Celsius affiliates will continue to be serviced," but will not issue new loans at this time.

Celsius has taken steps to repay some of its debts to decentralized cryptocurrency lending platforms such as Maker. Between June 14 and July 7, you paid off all your debt positions on Maker, freeing your lei collateral in wrapped Bitcoin (WBTC). She has also started paying off debts to decentralized financial platforms, with USDC $ 20 million sent to Aave on July 11.

However, these moves come too little and too late as token holders are suffering again.

The price of the CEL token collapses

La quotation of the CEL token fell 58% in the past few hours, going from an intraday high of $ 0,96 to a low of $ 0,40 during the Asian trading session on Thursday morning.

At the time of writing, CEL was trading at $ 0,53, after plunging 95% from its all-time high of $ 8,05 in June 2021.

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