Celsius touted itself as better than a bank. Now the crypto firm is filing for bankruptcy.

Celsius Network filed for bankruptcy protection on Wednesday after a “crypto winter” — or crash — that decimated the value of digital currencies including bitcoin and ethereum. The company said most accounts will continue to be “paused until further notice.”

Celsius is the third crypto-related firm to file for bankruptcy protection in two weeks. It follows Three Arrows Capital and lender Voyager Digital in seeking financial restructuring after digital currencies plunged in value. Celsius marketed itself as a type of crypto bank, encouraging people to deposit their digital currencies with the firm, and then earning money by either borrowing or lending against the crypto deposits.

Troubles for Celsius’ customers started when the network halted trading and other activities last month amid the crypto meltdown, effectively blocking customers from accessing their funds. The decision shocked customers who had been told by Celsius that the platform was low-risk and secure, all while providing earnings as high as 17%. In its sales pitch, Celsius pledged “Your interests are our top priority” and stressed that traditional banking “is broken.”

After filing for Chapter 11 bankruptcy protection on Wednesday, Celsius said that most account activity “will be paused until further notice.”

It added, “Withdrawals, swap and transfers between accounts will remain paused, and rewards will stop accruing as of the date of the filing. Celsius is not requesting authority to allow customer withdrawals at this time.”

In other words, customers still can’t access their funds, and it’s unclear whether Celsius depositors will get their money back, or which customers would get their money back first. Cyptocurrency lenders aren’t regulated like banks, so there’s no deposit insurance.

“Now I could be homeless”

The company’s terms of service warn that if Celsius files for bankruptcy, treatment of customers’ digital assets is “unsettled, not guaranteed, and may result in a number of outcomes that are impossible to predict reliably.”

“We never getting our money back huh,” one Twitter user wrote in response to a tweet from Celsius announcing the bankruptcy filing. Another Twitter user responded, “Deposited my crypto and took an emergency loan out literally MONTHS ago. An emergency … now I could be homeless. Thanks Celsius.”

In a statement, Celsius said the trading halt was necessary because without it, “the acceleration of withdrawals would have allowed certain customers — those who were first to act — to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery.”

Restructuring plan

By filing for bankruptcy, Celsius said it “intend[s] to put forward a plan that restores activity across the platform, returns value to customers, and provides choices.”

The company has $167 million in cash on hand, which it said is enough to pay for “certain operations” as it restructures. Its first goal is to receive court approval to continue to pay employees and provide their benefits without disruption, it added. 

The bankruptcy filing lists the company’s 50 largest creditors, the biggest being Pharos USD Fund, a crypto fund, with $81 million in unsecured claims. Other creditors include crypto trading group Alameda Research LTD and crypto brokerage Covario AG.