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Celsius goes bankrupt

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Cryptohecatomb: Celsius Network, the leading crypto lending platform, goes bankrupt

After a month of uncertainty for its investors, cryptocurrency lending firm Celsius Network has filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Act in an attempt to save the money deposited on the platform.

During a meeting of the platform’s board of directors yesterday, its members explained that investors began to accelerate the withdrawal of their money which allowed “certain clients, those who were the first to act, to receive their full payment” and those who took longer to carry out this recovery lost all their investments.

Lending in the crypto sector has fallen in recent months following the plunge in cryptocurrency prices. In the U.S., state securities regulators in New Jersey, Texas and Washington have stepped in to investigate the crypto lender’s decision.

June 13 saw a sharp drop (yet another one) in cryptocurrencies until bitcoin hit the $20,000 barrier that day (which translated into a 65% drop from its all-time high of November 2021). In this context of cryptoeconomic crisis, two major market platforms froze their activity, which further accentuated the fall, instead of containing the situation.

Specifically, the Binance and Celsius platforms froze transactions. Binance is the world’s largest cryptocurrency exchange by trading volume, while Celsius, bankrupt as of today, is a cryptocurrency lending platform. The trading halt failed to find some stability and led to a further drop in the value of both platforms’ own cryptocurrencies. Investors did not have the option of deciding whether to withdraw their assets or leave them, while watching the value of their money plummet.

Celsius was the “golden goose” for crypto investors. Following the decision to freeze trading and pending news from investors, the platform asked users for “more time to stabilize liquidity and trading.” And that time has resulted in a bankruptcy and a loss of money.

Three Arrows Capital, a company better known as 3AC, also filed for bankruptcy. This is one of the most famous investment firms in the world, and its bankruptcy, along with that of Celsius today, is a clear symptom that something is not working properly.

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