CEL - Why Celsius Networks Filed for Bankruptcy Protection -- and Why Celsius Token Is Tanking
A month after putting a freeze on account withdrawals, crypto lending firm Celsius Networks, issuer of cryptocurrency Celsius (CRYPTO: CEL) , has filed for Chapter 11 bankruptcy protection. It's the third crypto company bankruptcy protection filing in a month, after fellow lender Voyager Digital and hedge fund Three Arrows Capital (which owes Celsius money). Amid tanking crypto prices this year, Celsius may simply be the latest in what could be a growing number of crypto start-ups facing serious financial challenges.
Celsius' crypto token is exhibiting extreme volatility right now, and some investors might be tempted to bet on a rebound. Before you do follow suit, consider a few points.
Celsius filed for Chapter 11 bankruptcy protection , designed to help a company reorganize its debt while continuing to operate. That's the stated goal of Celsius here, to buy time as it sorts out its own debt and obligations it has to customer deposits. Chapter 11 is different from a Chapter 7 liquidation, which spells the literal end of a company as it is forced to shut down operations and sell all of its assets.
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Why Celsius Networks Filed for Bankruptcy Protection -- and Why Celsius Token Is Tanking