Crypto Lender Celsius's Clients Face Long Wait Over Fate Of Their Money

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Clients of crypto lender Celsius face long wait over fate of their funds

Customers of crypto lender Celsius face a long and anxious wait to know how, when and even if they will get their money back after the company filed for bankruptcy, becoming one of the biggest victims of the collapse in crypto markets this year.

Citing extreme market conditions, Celsius froze withdrawals in June in a move that reverberated through the crypto world and beyond, spurring a $300 billion selloff in digital assets and leaving legions of retail investors cut off from their savings.

Celsius Network, which is based in the US state of New Jersey, revealed a gaping $1.2 billion hole in its balance sheet when it filed for Chapter 11 bankruptcy in New York this week.

Customers should now buckle up for a bumpy ride as they await some clarity over the fate of their money, six lawyers specialising in bankruptcies, restructuring or crypto told Reuters.

With scant precedent for bankruptcies at large crypto companies, the prospect of multiple lawsuits against Celsius, as well as the high complexity of any restructuring, the Chapter 11 process is likely to be slow, the lawyers said.

"This could last for years," said Daniel Gwen at Ropes & Grey law firm in New York. "It's highly likely there's going to be a lot of litigation."

Celsius did not reply to requests for comment.

Crypto lenders boomed during the pandemic, attracting retail customers with double-digit rates rarely offered by traditional banks, in return for their crypto asset deposits.

On the flip side, institutional investors such as hedge funds paid lenders higher rates to borrow the coins, leaving firms such as Celsius to profit from the difference. Lenders also invested in riskier, so-called