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Celsius becomes latest crypto firm to file for bankruptcy in last two weeks

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Yahoo Finance’s David Hollerith joins the Live show to report that cryptocurrency company Celsius has filed for bankruptcy.

Video Transcript

BRIAN SOZZI: All right, more trouble in crypto. US-based crypto lender, Celsius is filing for bankruptcy. In June, Celsius froze withdrawals and transfers citing extreme market conditions. This also comes just one week after another crypto lender, Voyager Digital declared bankruptcy and paused all withdrawals and deposits. Let's bring in Yahoo Finance crypto reporter David Hollerith on this. David?

DAVID HOLLERITH: Brian, crypto's unfolding financial distress is increasingly happening in the courts. So the Celsius Network is actually the third crypto firm counting Voyager as you mentioned, and Three Arrows Capital, the crypto hedge fund that has recently blown up, to be filing bankruptcy. Now just a little bit of info on Celsius Network, they amassed more than $20 billion in funds last year by offering up to 18% on high-yielding interest crypto accounts. And given the market downturn, Celsius sort of earned returns on the-- for their customers by offering-- by basically making a lot of highly leveraged DeFi trades.

And during the-- and with the shift in the market sort of, the-- these trades have gone south, and that's left a lot of customers sort of waiting for something to happen. And given the fact that Celsius has faced insolvency issues they've had to freeze customer accounts. Now, in the filing, they have 100,000 creditors, as well as $1 billion to $10 billion in assets, which are going to be split somehow.

JULIE HYMAN: And what about-- you know, for these people who had their assets frozen, do we know anything about whether they're going to get their money back?

DAVID HOLLERITH: Assets are still frozen. And they've sort of doubled down on the act to freeze them as a way to say basically that this was a way to prevent a bank run so that effectively the customers who are now creditors could be paid out equally. that will be-- that remains to be seen how it will be interpreted in the court.