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Crypto lending platform Celsius has reportedly filed for Chapter 11 bankruptcy, having notified individual U.S. state regulators on Wednesday, July 13.
The news was reported by CNBC and referred to an unnamed source, who asked not to be named as the proceedings were private.
The source noted that Celsius plans to file the paperwork “imminently.”
The news comes just days after the lending platform replaced its previously hired law firm with Kirkland & Ellis LLP, the same firm that assisted Voyager Digital with its bankruptcy filing in the Southern District Court of New York last week.
It follows the news the platform had officially paid off all of its DeFi debts to Maker, Compound, and Aave this week, reducing its debt from $820 million to zero in a matter of weeks.
On Tuesday, Vermont’s Department of Financial Regulation (DFR) issued a warning against the troubled crypto lending firm, reminding consumers that the firm is not licensed to offer its services in the state.
The DFR also stated it believed the company was “deeply insolvent” and doesn’t possess “assets and liquidity” to fulfill its obligations toward the customers, and accused them of mismanaging customer funds by allocating them towards risky investments.
Vermont has become the sixth state in America to open an investigation into Celsius’s crypto interest rate accounts, joining the likes of Alabama, Kentucky, New Jersey, Texas and Washington.
Rumors of Celsius’ insolvency began circulating last month after the crypto lender was forced to halt withdrawals due to “extreme market conditions” on June 13.