Two cryptocurrency lending platforms known to be in distress recently have officially filed for bankruptcy. This made the price of one altcoin project skyrocket while the other crashed. Here are the details…
Celsius files for bankruptcy: CEL price crashes
After making continued efforts to repay its loans, crypto lender Celsius Networks has decided to file for Chapter 11 bankruptcy on Wednesday, July 13. Following the news, Celsius Networks’ native cryptocurrency CEL fell more than 50 percent from its high of $0.95. CEL fell as low as $0.42.
Currently, CEL is changing hands at $0.59, down 17.11 percent. As explained by Celsius, the company currently has $167 million in cash on hand. Celsius said this would provide sufficient liquidity to support operations during the restructuring process. Under Chapter 11 bankruptcy rules, the borrower negotiates with the creditor to change the loan terms. Unlike Chapter 7, the good thing here is that the debtor doesn’t need to liquidate their assets.
Celsius CEO made a statement
Celsius said it will go through an extensive restructuring process to maximize value for all stakeholders. The company filed its bankruptcy with the United States Bankruptcy Court for the Southern District of New York. Alex Mashinsky, co-founder and CEO of Celsius, said:
This is the right decision for our community and company. We have a strong and experienced team to lead Celsius through this process. Looking back at Celsius’s history, I am confident we will see this as a defining moment when acting with determination and confidence serves society and strengthens the company’s future.
Voyager Digital’s bankruptcy filing sends altcoin price skyrocketed
Voyager Digital has also filed for Chapter 11 bankruptcy protection. Unlike CEL, this spiked the VGX altcoin from $0.15 to $1.03. So, a 586 percent gain was seen. As we reported on cryptokoin.com, in late June, Voyager first filed an official default notice to 3AC requesting repayment of a previous loan of approximately $650 million consisting of 15,250 Bitcoin (BTC) and $350 million worth of USDC.
Voyager later announced a few days later that it had temporarily halted trading activities on its platform due to liquidity issues arising from 3AC’s outstanding debt. It started a restructuring process last week by filing for bankruptcy protection. CNBC reported Tuesday that a federal judge in New York had frozen the assets of Three Arrows Capital at a time when the whereabouts of fund co-founders Zhu Su and Kyle Davies were unknown.
Later in the day, the VGX token began its massive rise despite the lack of direct evidence that the court order caused Voyager to rally. It is also notable that traders holding VGX in the app cannot actually sell or take advantage of the rally, as Voyager has stopped trading on their platform.
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