Celsius, a crypto lending firm, froze their withdrawals on Sunday and now has hired restructuring attorneys from a law firm in order to get assistance about the current financial condition. Citing “extreme market conditions”, Celsius had taken the decision to pause withdrawals along with ceasing the option of transferring products.
The lawyers are expected to help the firm navigate through this crisis by providing potential solutions as the company is witnessing growing financial troubles. The freeze continues to remain as Celsius has not commented about the same at the moment.
It can be assumed that this ban will remain for an indefinite period, despite the firm’s extensive measures to find a solution about the increasing financial predicament.
It is also reported that the lending platform is not only seeking help from restructuring attorneys, but also from investors who could provide financial advice regarding the said restructuring.
Details About The Measures Taken By Celsius
As per reports the new attorneys who have been hired are from the law firm Akin Gump Strauss Hauer & Feld LLP. As mentioned above investors will also be providing their insights.
At its peak Celsius had over $10 billion in client assets, but the broader crypto sell-off along with an extended market downfall made the lending platform take such a dramatic step.
From the website of Celsius it had $11.8 billion in assets reported on May 17th and had a total $8.2 billion in loans.
Not just this, its also had 1.7 million users according to company sources. After looking at financing options through investors, the firm finally decided that they would stick to a complete financial restructuring.
Celsius was one of the lending firms that was known to offer lucrative yields, up to 18.63% annual percentage yield (APY).
Due to this attractive yield, there were concerns about the business sustainability model from the beginning. These questions regarding sustainability of the framework was never discussed or addressed.
Related Reading | Why Celsius’ GK8 Company Announced Support For Tezos And Other Layer 1 Protocols
Possible Chances Of Money Swindling And Other Regulatory Concerns
Celsius has also mentioned about a possible scam that could happen by the so-called CEL2.0 token. This token has not been created by Celsius and chances are it is a scammer who is looking to profit from the firm’s current financial crisis.
Currently, the firm has managed to add 6,000 Wrapped Bitcoin (WBTC) to its DeFi platform MakerDAO which will help to lower the price and can further be liquidated.
Celsius was yet to register with the US financial regulators and this meant that such kind of an experience that the firm is undergoing at the moment could have happened anytime. After the firm took such a step, SEC chairperson, Gary Gensler, has cautioned investors about such platforms that provide such heavy returns as they can be potentially dangerous.
Additionally several senators had pushed a crypto bill last week which is to safeguard investors in an event of a crypto firm going bankrupt.
Related Reading | Lending Platform Celsius Freezes Withdrawals, Raising Liquidity Concerns
Source: https://bitcoinist.com/celsius-restructuring-attorneys-withdrawal-cease/