Celsius, a popular crypto lending platform, has allegedly submitted an application for Chapter 11 bankruptcy. This comes after the platform made headlines a few weeks ago for preventing its clients from withdrawing their assets. They blamed the decision to freeze clients’ accounts on the poor market conditions at the time.
Celsius reportedly notified regulators of their intentions on July 13.
According to reports, the reason for filing for Chapter 11 bankruptcy was to
“provide the Company with the opportunity to stabilize its business and consummate a comprehensive restructuring transaction that maximizes value for all stakeholders.”
During the reported restructuring, reports claim that Celsius will use its $167 million cash to “support certain operations during the restructuring process.”
Celsius hired the services of Kirkland & Ellis LLP, the firm that handled Voyager Digital’s bankruptcy case.
What happened after the bankruptcy filing
After nearly 18 months in bankruptcy proceedings, Celsius officially emerged from Chapter 11 on January 31, 2024, beginning the process of returning assets to creditors under its court-approved restructuring plan. The company closed its lending business, shut down its mobile and web applications, and started distributing cryptocurrency, cash, and equity in the reorganized mining business, Ionic Digital, to eligible creditors.
Throughout 2025 and into 2026, Celsius carried out additional rounds of distributions as more assets were recovered through litigation, reserve releases, and asset sales. A fourth distribution, valued at approximately $344.4 million, began rolling out in February 2026, with eligible creditors receiving payments through Coinbase, PayPal, Venmo, wire transfers, or checks depending on their assigned distribution method.
Celsius’ former CEO recently pleaded guilty to fraud-related charges
On July 25th, 2026, former CEO Alexander Mashinsky pleaded guilty to fraud-related charges for misleading customers about the company’s financial health and manipulating the price of the CEL token. In May 2025, he was sentenced to 12 years in federal prison and ordered to forfeit roughly $48 million. Prosecutors said Mashinsky falsely assured customers that their deposits were safe while Celsius was facing severe financial distress.
The U.S. Federal Trade Commission also announced settlements with Mashinsky and Celsius co-founders Daniel Leon and Nuke Goldstein, requiring them to pay a combined $16.5 million and permanently restricting them from marketing or operating certain digital asset products. The FTC alleged the executives deceived customers about Celsius’ reserves, insurance coverage, withdrawal policies, and lending practices before the company collapsed.
For former customers, the bankruptcy process remains ongoing despite multiple distribution rounds. Community discussions on Reddit show that many creditors have recovered a substantial portion of their claims, though opinions remain divided over whether future distributions will significantly improve recoveries. Users have also repeatedly warned others about phishing scams impersonating Celsius distribution emails, encouraging creditors to verify communications through the official claims portal.
Also Read: Crypto Kingpin “Hu Shi” Arrested in Japan Over Alleged Global Fraud Network
Celsius Stock Slides as Core Brand Sales Slow
Celsius Holdings’ shares fell roughly 17% after the company reported second-quarter results that showed a sharp slowdown in its flagship Celsius energy drink business. While overall revenue exceeded Wall Street expectations, investors focused on an 11.7% decline in sales from the core Celsius brand, raising concerns that the company’s rapid growth phase may be losing momentum.
The decline comes after years of exceptional expansion that made Celsius one of the fastest-growing names in the U.S. energy drink market. Analysts said the results suggest the company is now facing a more mature market, where sustaining growth is becoming increasingly difficult.
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