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Celsius Prepares for Potential Bankruptcy

Celsius Network hires advisers as it prepares for a potential bankruptcy case.

By Anna B Kiwanuka

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According to a recent Wall Street Journal report, the embattled cryptocurrency lending platform, Celsius Network may be getting ready to declare bankruptcy after its recent hiring of restructuring advisors from Alvarez & Marsal.

Earlier this month, Celsius Network had abruptly suspended users from withdrawing, swaps, and transfers citing the recent market crash for its decision.

Since then, the platform has given customers very little to no information about the resumption of its services. However, on June 15, its CEO, Alex Mashinsky, made a vague statement claiming that his team was “working non-stop.”

According to the available information, Celsius is now looking for new investors for funding while also thinking about declaring bankruptcy,  in light of the recent findings.

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Per its terms of use,

“In the event that Celsius becomes bankrupt, enters liquidation or is otherwise unable to repay its obligations, any Eligible Digital Assets used in the Earn Service or as collateral under the Borrow Service may not be recoverable and you may not have legal remedies or rights in connection with Celsius.”

At its peak, Celsius had over 1.5 million users offering up to 18% in returns for customer deposits. The firm also claimed that it had around $12 billion in assets under management as of May 2022.

Celsius is not the only crypto lender facing liquidity issues. Due to the current crypto market crisis, which has sparked talk of a bailout, other companies like Voyager, BlockFi, and Three Arrow Capitals have also experienced cash shortages.

Hester Peirce, an SEC commissioner, recently stated in an interview that she is opposed to bailing out cryptocurrency businesses. Changpeng Zhao, CEO of Binance, likewise holds the same opinion, claiming that bailouts for failed projects are absurd.


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