After Celsius Bankruptcy Filing, CEL Holders try Short Squeeze to Recover Funds

The proceedings have put focus on and sparked concerns about the long-term growth of CEL, Celsius's native token.

Celsius Network is considered the nightmare of the cryptocurrency market, and there are valid reasons to do so. The ongoing Celsius crisis has been dubbed the crypto communities' "Lehman Brothers moment," which has caused the market to crash and worsen the already stressed ecosystem. The company has been facing several lawsuits for mismanaging its customers' investments. With this, one certain thing is that this issue will have a serious repercussion on the cryptocurrency market, particularly on the DeFi (Decentralized Finance) lenders.

Celsius filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York late Wednesday. The filing followed a company decision to pause withdrawals, swaps, and transfers on its platform in June citing "extreme market conditions."

According to Coin Desk, a Chapter 11 filing is frequently referred to as a "reorganization" bankruptcy, meaning the debtor remains "in possession" of and may continue to operate the business, and can borrow new money with court approval. The code is mostly used by large businesses to help them reorganize their business debts and repay their creditors while continuing their operations.

The proceedings have put focus on and sparked concerns about the long-term growth of CEL, Celsius's native token. CEL was used in exchange for services and as a reward on Celsius, with wallet balances having over 20% of their holdings in CEL tokens obtaining a 30% bonus interest and 30% loan interest discount.

The community had earlier attempted a similar action of a short squeeze which had significantly risen the prices by 100%. A similar action was attempted amid the fear of losing all the funds, a couple of hours before. Short squeeze refers to mounting extreme buying pressure to eliminate the shorts has become pretty common nowadays. Therefore, the squeeze may be due to the platform locking up the user's funds for almost a month.