Celsius Network, one of the top decentralized platforms in crypto, is looking at a possible bankruptcy filing. Celsius has faced liquidity issues following the recent crypto market downturn and has already halted withdrawals, swaps, and transfers from the platform.
Celsius hires advisers for a potential bankruptcy filing
CEL is a DeFi lending platform, and a report from the Wall Street Journal (WSJ) said that the company was hiring advisers to aid the company in the procedure for filing for bankruptcy.
The Celsius Network has hired several consultancy firms to help the DeFi platform navigate how it will address bankruptcy issues. The consultants hired are from the Alvarez & Marsal firm and will advise the company on any matters concerning filing for bankruptcy.
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The hiring of this firm comes after the network hired restructuring lawyers amid its deepening financial crisis. Celsius was among the first networks to feel the bluntness of the ongoing recession in the crypto market. However, over the past few weeks, other DeFi platforms, including Babel Finance and Finblox, have similarly halted withdrawal services.
Withdrawals on the CEL have been halted since June 12. At the time, the company said that “extreme market conditions” was the reason behind halting these services. The CEO of the platform, Alex Mashinsky, and other executives at the network have remained rather silent on Twitter regarding the matter. On June 19, the network announced it would be halting discussions on Twitter Spaces and AMAs to address operational issues.
Regulators turn attention toward Celsius
The action of the Celsius Network to halt withdrawals has attracted regulatory attention. Several states in the US have said that they are looking into the issue with the accounts that have been frozen by the network. The Texas State securities Board director of the enforcement division, Joseph Rotunda, said that regulatory agencies in Alabama, New Jersey, Kentucky, Washington, and Texas were looking into the issue with CEL.
Some top team members at Celsius have also discussed a recovery plan. The lead investor at Celsius, Simon Dixon, had proposed that the network implement the same recovery as Bitfinex did after the 2016 hack. Dixon noted that by doing this, the network would have a “financial innovation” solution.
The collapse of the Celsius network is bound to attract regulatory attention due to the firm’s size. In November 2021, Celsius reached a valuation of $3.5 billion after a Series B funding round. However, the valuation has since dropped following the ongoing bearish trend.
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