Crypto Lender Celsius Hires Restructuring Lawyers After Account Freeze

Crypto lender Celsius Network has hired restructuring lawyers for consultations regarding its mounting financial problems.

Bishal Kumar Chanda3 min read
Crypto Lender Celsius Hires Restructuring Lawyers After Account Freeze

Crypto lender Celsius Network has hired restructuring lawyers for consultations regarding its mounting financial problems. Notably, the crypto lending giant announced pausing all withdrawals four days ago due to the prevailing market crisis. While Celsius is taking aggressive measures to help its cause, the freeze continues indefinitely.

According to The Wall Street Journal, Celsius has hired attorneys from the law firm Akin Gump Strauss Hauer & Feld LLP. The crypto lender seeks advice on possible solutions for its current financial challenges.

Primarily, Celsius is looking for possible financing options from investors. However, the New Jersey-based firm is also exploring other strategic alternatives, including a financial restructuring.

Last November, Celsius raised $750 million in a Series B funding round, bringing its valuation to $3.5 billion. After announcing the suspension of all withdrawals on its platform on Sunday, Celsius sent shockwaves throughout the crypto industry.

The firm tried to reason for the move by citing "extreme market conditions" and its need to "stabilize liquidity." Before pausing operations, Celsius claimed a user base of 1.7 million, offering a yield of up to 18% on customer deposits. According to the firm's website, it held $11.8 billion in assets under management as of May 17, 2022.

Celsius Breaks Its Silence

On Tuesday, Celsius took to Twitter, saying it is "working as quickly as possible and will share information as and when it becomes appropriate."

Celsius breaks silence on freezing withdrawals

"Acting in the interest of our community remains our top priority," the firm added.

Celsius's native token CEL plummeted as low as $0.31 following Sunday's announcement. Furthermore, the token lost around 70% of its value in a matter of an hour.

Soon after the firm tweeted on Tuesday, the token rallied above $1.10 shortly before correcting to its current value of $0.53.

Moreover, the firm has cautioned users that the "CEL2.0" token is not its creation. Instead, it is likely a scammer trying to profit from Celsius Network's current crisis.

As for its position in the market, the crypto lending platform has added 6,000 Wrapped Bitcoin to the MakerDAO. Therefore, lowering the price at which Celsius could be liquidated.

In case Celsius fails in its saving operations, the firm might consider a buyout order from rival platform Nexo. On Monday, Nexo sent Celsius a letter offering to acquire its assets based on its robust liquidity. However, this might also mean acquiring Celsius' 1.7 million customer base.

Meanwhile, lawmakers are highlighting what could happen in case a cryptocurrency platform fails. Last week, a bipartisan duo of senators proposed a law to protect investors in case a crypto exchange files for bankruptcy. It can be done by ensuring that users' digital assets are held separately.

Get deals in your inbox

Get our free, 5 min weekly newsletter. Used by thousands of people to earn more interest on their crypto.

No spam, unsubscribe anytime. Read our Privacy Policy.