Crypto lending platform Celsius has reportedly filed for Chapter 11 bankruptcy, with its lawyers starting to notify individual United States state regulators as of Wednesday.
The news was reported by CNBC and referred to an unnamed source, who asked not to be named, as the proceedings were private. They said that the company planned to file the Chapter 11 paperwork “imminently.”
It comes just days after the embattled lending platform replaced its previously hired law firm Akin Gump Strauss Hauer & Feld LLP with Kirkland & Ellis LLP, the same firm that assisted Voyager Digital with its bankruptcy filing last week.
Earlier in the day, Celsius closed off the last of its decentralized finance (DeFi) debts owed to Compound, Aave and Maker, reducing its initial debt of $820 million to just $0.013 over the course of a month.
Still unknown, however, will be the fate of depositors who still have their assets locked up on the lending platform. Neither the company nor its CEO Alex Mashinsky has made any public comments about whether depositors will receive any percentage of their funds back.
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 toward risky investments.
Related: Bombshell allegations of fraud as KeyFi takes Celsius to court
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.
Update: Celsius vows to return from bankruptcy but expert fears repeat of Mt Gox