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On Wednesday, digital currency lending platform Celsius Network announced that it was officially filing for Chapter 11 bankruptcy. It was a move many saw coming, but Celsius users had hoped that it wouldn’t materialize.

The lender has an estimated 100,000 creditors and has $12 billion under management as of May. It’s unclear what its exact financial position is as of the announcement.

What happened to Celsius? What is Chapter 11 bankruptcy?

Last month, Celsius froze withdrawals and made a public announcement that it was experiencing liquidity issues due to extreme market conditions. Those conditions are well known to everyone involved in the industry; a major hedge fund blew up, several lending platforms went under, and the house of cards came tumbling down as many predicted. This chain of events led Celsius to file for Chapter 11 bankruptcy this week in New York.

It’s important to note that Chapter 11 bankruptcy differs from Chapter 7 bankruptcy. In the latter case, a debtor’s assets are liquidated, and secured creditors are paid first, with unsecured lenders (retail) getting what’s left over. Chapter 11 bankruptcy, on the other hand, allows the company to continue operating while its debt is restructured under the supervision of a court-appointed trustee. It’s something like what Mt. Gox filed for in 2014, although Japan’s law is slightly different.

Celsius CEO Alex Mashinsky said the decision was “the right move for our community and company,” while Celsius’ official announcement talked about “maximizing value” for stakeholders. As the following Twitter thread shows, angry Celsius users weren’t buying it. They want their money, and they want it now.

On-chain scaling is the only solution to this madness

While speculators are rightly focused on getting their funds back from companies like Celsius and Voyager, there’s a bigger point to be made here; the industry was never supposed to be this way.

Centralized trusted third parties like Celsius Network were never supposed to exist. Everything was supposed to happen on the Bitcoin blockchain in self-custodial wallets. However, the various failed blockchains that can’t scale are incapable of bringing this about, so they use centralized exchanges and platforms to try to work around their baked-in problems.

In reality, the original Bitcoin blockchain, as Satoshi Nakamoto designed it, never hit a scaling ceiling. It’s perfectly possible that on it, users could buy, sell, swap, and even lend and borrow for interest (via legally binding ‘smart’ contracts) using wallets they control the keys to. 

Celsius, Voyager Digital, and even centralized exchanges like Coinbase (NASDAQ: COIN) and Binance would not exist in such a world. Sad events like hard-working people losing their life savings because of the irresponsible actions of companies like Celsius Network would not occur. Instead, users of Bitcoin would always hold the keys to their own coins, eliminating the risk associated with centralized platforms while allowing all of the same innovation and opportunities the industry is trying and failing to unlock.

Is it too late to restore Satoshi’s vision?

Is it too late to build a true Bitcoin world? No, because the original Bitcoin blockchain has been restored and exists today as Bitcoin SV. It allows for products like Fabriik Weave, which lets users trade tokens instantly for fractions of a cent. It allows users to earn interest in liquidity pools on platforms like TokenSwap. It unleashes the true power of peer-to-peer transactions at scale.

While tragic, let the implosions of platforms like Celsius and Voyager be a lesson; Satoshi didn’t invent Bitcoin so firms like them could recreate another centralized banking system—old wine in new bottles. Instead, he created it so we can build a new peer-to-peer world of on-chain transactions where we are always in control of our own money. To make that world a reality, we need a massively scalable blockchain with tiny fees. Thankfully, we’ve had one all along—it’s the one Satoshi gave us in the first place, Bitcoin SV.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups from BitMEX to BinanceBitcoin.comBlockstreamShapeShiftCoinbaseRipple, EthereumFTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.

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