Celsius’ Mining Unit Files for Bankruptcy Alongside Parent Company
- Celsius and its mining unit have just issued fillings for chapter 11 bankruptcy protection.
- Users are worried about their savings, despite assurance of a possible solution in the near future.
The mining unit of crypto lender Celsius network, on Thursday, has filed for bankruptcy alongside its parent company. Hence, Celsius and its mining unit have just issued fillings for chapter 11 bankruptcy protection according to reports.
Prior to the filing, Celsuis’ mining unit had disclosed plans for an IPO launch. A few months ago, the unit announced that it had filed a confidential S-1 draft registration with the U.S. Securities and Exchange Commission (SEC). This was an effort aimed at taking the company public.
Quite unfortunately, the proposed IPO event by the mining unit failed in the long run as investors in the mining sector could not ignore the possibility of litigation risk.
Celsius Struggles Amid Market Crash
It is well known that Celsius is one of the crypto lending platforms the recent market slump has greatly affected. Just like BlockFi and Voyager, Celsius is also seen struggling tremendously to survive the impact of the market crash on its company.
However, the distress has also extended to its mining unit as the long persisting bear market has compelled miners to sell their mined cryptos and use the proceeds to settle their operating costs.
The market downturn has massively affected many individual miners, with some being left to struggle with the debt crisis. Hence, they are forced to make choices that would help them survive the challenging times.
The financial troubles had caused the parent company to pause customer withdrawals while they faced bankruptcy. The company is triggered by the huge casualty of a $2 trillion crash that has wiped out some of the industry’s biggest names. This unfortunate situation did not leave investors out as it exposed hundreds of thousands of individual investors to steep losses.
The company explained the need to halt withdrawals was very necessary to save the situation. It claimed that without it, an acceleration of the pullouts “would have allowed certain customers —- those who were first to act — to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery.”
Celsius Mining, on the other hand, has been a very functional unit in the industry as it offers investment and lending services to customers. It also helps to host the miners to which it lends. As such, if not properly controlled, the distressing situation ultimately affects its miners and investors.
In a bid to curtail the financial woes poised to them amid the market struggles, the mining unit has sought to file for bankruptcy protection. Although, the move may be a blow to investor sentiment in the mining sector.
Rebecca is a Senior Staff Writer at BitcoinWisdom, working hard to bring you the latest breaking news in the cryptocurrency market. In the words of Elon Musk “Buy stock in several companies that make products & services that *you* believe in. Only sell if you think their products & services are trending worse. Don’t panic when the market does. This will serve you well in the long-term.”
