Celsius Network, a leading cryptocurrency lender, has announced filing for Chapter 11 bankruptcy. The company cited the collapse of major token TerraUSD in May as one of the reasons for their financial troubles. Despite this setback, the company remains hopeful that it can emerge from bankruptcy and continue to serve its customers. This announcement is a stark reminder of the volatility of the cryptocurrency market and the importance of doing your research before investing.
The co-founder of Hubble Protocol, Marius Ciubotariu, has spoken out about the recent news that Celsius Network has filed for Chapter 11 bankruptcy. He believes that this is a result of the collapse of Terra Luna’s UST token, which has taken down many prominent investment funds and platforms. This could harm Celsius’s retail userbase through no fault of their own. Ciubotariu also calls for greater transparency from companies in the blockchain and cryptocurrency space.
Stefan Rust, CEO of Truflation and Laguna Labs, says:
“Before beginning, I want to make one thing very clear: there is a big difference between decentralized finance (DeFi) platforms like MakerDAO and centralized finance (CeFi) platforms like Celsius, BlockFi, and Voyager Digital. Celsius, BlockFi, and Voyager Digital are not DeFi. They are opaque companies controlled by a small group of people.
Nonetheless, it is unfortunate to see these CeFi institutions fall like a house of cards. These were regulated entities. They had big licenses and other permissions that enabled them to operate under regulated frameworks. This gave them cover, ultimately leading to trust from other institutions.
The news that Celsius now faces bankruptcy is just another example of the consequences of untransparent, institutionalized lending structures managed and maintained by traditional financial institutions and regulations. These structures take advantage of the financial situation, and their opacity typically leads to steep losses for the average investor.”