Celsius Network

Celsius Network was a cryptocurrency lending platform that allowed users to deposit digital assets and earn interest.³⁸ The company filed for Chapter 11 bankruptcy in July 2022 after freezing customer withdrawals.²³¹⁴ Celsius emerged from bankruptcy on January 31, 2024, and began distributing assets to creditors.¹¹⁴

Timeline

Money raised

Celsius Network raised $50 million in an initial coin offering in March 2018.⁷ Celsius Network raised $21 million in a Series A round in March 2020.⁷ Celsius Network raised $10 million from Tether in a strategic investment round in June 2020.⁷ Celsius Network raised $19 million in an equity round led by gumi Cryptos Capital in July 2020.⁷ Celsius Network raised $400 million in a Series B round led by WestCap and CDPQ in October 2021 at a valuation of over $3 billion.⁸¹² Celsius Network extended its Series B round by $350 million in November 2021, bringing the total round to $750 million and valuation to $3.25 billion.³⁷ Celsius Network raised a total of $864 million across 7 funding rounds.⁷

Investors named in the sources: WestCap³⁸¹², Caisse de dépôt et placement du Québec³⁸¹², Tether⁷, gumi Cryptos Capital⁷, Disrupt Ventures⁷, Tokentus Investment⁷, Alpha Transform Holdings⁷, Kyle Wang⁷.

What happened

Celsius Network was founded in 2017 as a cryptocurrency lending and borrowing platform.⁷¹¹ The company allowed users to deposit Bitcoin, Ethereum, and Tether and receive weekly interest payments.³ Celsius offered interest rates as high as 18% per year depending on the token and time horizon.³ By October 2021, Celsius reported total assets exceeding $25 billion and more than 1 million registered customers.⁸¹² Celsius had paid more than $850 million in interest to users through its Earn product in just over three years.⁸¹²

In June 2022, Celsius paused withdrawals, swaps, and transfers on its platform.³⁷ On July 13, 2022, Celsius Network and certain affiliates filed voluntary petitions for Chapter 11 bankruptcy in the Southern District of New York.²³¹⁴ The bankruptcy filing listed assets and liabilities between $1 billion and $10 billion and more than 100,000 creditors.³ Celsius did not request authority to resume customer withdrawals at the time of filing.³ The company said the bankruptcy filing would provide an opportunity to stabilize its business.³

Celsius had raised over $850 million from investors, including WestCap and Caisse de dépôt et placement du Québec.³ The company's CEO Alex Mashinsky said the new funding would reassure regulators of the company's stability and compliance.¹² Celsius intended to use the funding to expand products, double its team from 486 to nearly 1,000 employees, and pursue strategic acquisitions.⁸¹² In November 2021, Celsius acquired custody startup GK8 for $115 million.⁷ Celsius announced plans to invest $300 million in green Bitcoin mining in November 2021.⁷

The company had previously committed $200 million to Bitcoin mining in June 2021.⁷ Celsius faced challenges due to exposure to the stablecoin Terra, the hedge fund Three Arrows Capital, and later FTX.⁶ An independent examiner's report filed in February 2023 alleged that Celsius lacked robust risk management policies and had incomplete financial statements.⁶ The report alleged that Celsius executives used customer deposits and equity fundraising to prop up the value of their proprietary token CEL.⁶ The report alleged that Celsius announced it had raised $50 million from its initial coin offering when it actually only raised $32 million.⁶

The report alleged that Celsius was the only major buyer of its CEL token and timed purchases to inflate the price.⁶ The report alleged that Celsius employees discussed that the CEL token was worthless and its price should be zero.⁶ The report alleged that founders Alex Mashinsky and S. Daniel Leon sold CEL tokens worth approximately $68.7 million and $9.74 million respectively between 2018 and the bankruptcy.⁶ The report alleged that Celsius had no written risk management policy until early 2021.⁶ The report alleged that Celsius made loans that were unsecured or not fully secured and invested approximately $604 million in an intercompany loan to start a BTC mining operation.⁶

The report alleged that Celsius used a non-conventional method to calculate net interest margin, making its numbers look better.⁶ On November 9, 2023, the bankruptcy court confirmed the Modified Joint Chapter 11 Plan of Reorganization.¹⁴ Celsius emerged from Chapter 11 bankruptcy on January 31, 2024.¹¹⁴ Beginning February 1, 2024, claim distributions to eligible creditors were made in cryptocurrency and US dollars.¹ Some creditors were eligible to receive equity shares in Ionic Digital LLC, the reorganized mining business.¹

On February 29, 2024, the Celsius mobile and web apps were shut down as part of the winding down of business operations.¹ The Litigation Administrator appointed under the reorganization plan pursued preference claims against former customers who withdrew digital assets shortly before the bankruptcy filing.¹³¹⁵ A group of 174 former Celsius customers sought to withdraw the reference of bankruptcy avoidance proceedings to the district court, but the motion was denied on December 9, 2025.¹³ The court held that the Chapter 11 Plan's definition of Withdrawal Preference Exposure does not limit the Litigation Administrator's statutory right to pursue avoidance actions.¹⁵ The court found that it has personal jurisdiction over all defendants, including foreign parties, who were properly served.¹⁵

The court determined that the transfers at issue were domestic in nature.¹⁵

Legal outcomes

• filedCelsius Network filed for Chapter 11 bankruptcy protection on July 13, 2022.²³¹⁴
• filedThe Litigation Administrator initiated thousands of avoidance actions against former customers who withdrew more than $100,000 in cryptocurrency during the 90-day preference period preceding the bankruptcy.¹⁵
• pendingThe court held that the Chapter 11 Plan's definition of Withdrawal Preference Exposure does not limit the Litigation Administrator's statutory right to pursue avoidance actions.¹⁵
• pendingThe court found that it has personal jurisdiction over all defendants, including foreign parties, who were properly served.¹⁵
• pendingThe court determined that the transfers at issue were domestic in nature.¹⁵

Where the founders are now

Alex Mashinsky was the co-founder and CEO of Celsius Network.³ The independent examiner's report alleged that Mashinsky sold at least 25 million CEL tokens worth approximately $68.7 million between 2018 and the bankruptcy.⁶ The independent examiner's report alleged that founder S. Daniel Leon sold at least 2.6 million CEL tokens for at least $9.74 million.⁶

Sources

1. Celsius Network, celsius.network
2. Major crypto lender Celsius files for bankruptcy, reuters.com, Jul 14, 20
3. Big crypto lender Celsius files for bankruptcy, TechCrunch, 2022-07-14
6. Celsius report details red flags investors missed | Fortune, Fortune, Feb 7, 202
7. Celsius Network Valuation, Funding & Investors | Multiples, multiples.vc, Sep 18, 20
8. Celsius Network Announces an Investment Led by WestCap and CDPQ at a Valuation More Than US $3B | La Caisse, La Caisse, 2021-10-11
11. Celsius Network IPO Timeline and Financing Details - Forge, forgeglobal.com
12. At $3B+ valuation, Celsius Network raises $400M in funding for crypto lending - SiliconANGLE, SiliconANGLE, 2021-10-12
13. Former Celsius Customers’ Motion to Withdraw Bankruptcy Court Reference Rejected by SDNY, bankruptcyroundtable.law.harvard.edu, Jun 9, 202
14. Celsius Network LLC, et al., cases.stretto.com
15. Celsius Bankruptcy Litigation Update: Key Phase One Rulings and Strategic Considerations for Defendants in Phase Two and Beyond - Falcon Rappaport & Berkman LLP, Falcon Rappaport & Berkman LLP, 2025-07-29

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