Celsius Network Hires A Lawyer To Prepare For “Bankruptcy”
The Celsius Network lending platform is said to be preparing for “default” after blocking withdrawals from users. The company has hired a lawyer to design the “debt restructuring” process.
Celsius Network prepares for “bankruptcy”
On the morning of June 15, the Wall Street Journal reported that Celsius Network, the lending platform at the heart of the current sell-off in the cryptocurrency market, hired the law firm Akin Gump Strauss Hauer & Feld LLP to prepare for the launch of the process of “debt restructuring”.
The WSJ source revealed that Celsius “is considering financing options from investors, but has not overlooked other possibilities such as corporate restructuring”.
Celsius network is valued at up to 3.25 billion USD, with the participation of many large investment institutions, including Canada’s second-largest pension fund in November 2021. However, due to various events, from giving money to a hacked project to investing in LUNA-UST, then stETH, Celsius’s liquidity has eroded in just the past 6 months at an alarming rate.
The project’s Twitter page posted the latest update a few hours ago.
Celsius’s problem started when the stETH token (representing ETH staking on Lido to join Ethereum 2.0) slipped against ETH on Curve. Since most of Celsius’ assets are in the form of stETH, many fear the project will no longer have enough liquidity to pay users and conduct massive withdrawals.
On the morning of June 13, Celsius network announced that it was blocking deposits, withdrawals, and transactions on its platform, causing a new panic in the crypto market and causing the prices of BTC, ETH, and many major altcoins to plunge to their lowest levels since. December 2020 January 2021.
Some Twitter users were quick to reiterate Celsius’ statement announcing that in the event of default, bankruptcy, or financial insolvency, the user’s crypto assets in the Earn service or The collateral in the Borrow service (borrow money) may not be recoverable, the user will have no rights to Celsius except to become a creditor of the platform under applicable law.
Meanwhile, Celsius network is still actively mortgaging the remaining assets to maintain a DAI loan order on Maker to meet liquidity. As of June 15, Celsius is spending up to 39,862 WBTC (worth more than half a billion USD) to borrow 231 million DAI – the most significant DAI loan order on Maker. This loan order will be liquidated if the BTC price drops to the $14,000 mark.
Loan orders of $303 million on Aave and $217 million on Celsius’s Compound are also considered more stable than June 13.
The CEL token price in the last 24 hours suddenly had a 300% increase on the evening of June 14, with a high probability of a “short kill” before falling back to the old level.
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