A new Wall Street Journal report has revealed that the embattled crypto lending platform, Celsius Network, could be preparing to file for bankruptcy as it has hired restructuring consultants from advisory firm Alvarez & Marsal.
Earlier this month, Celsius Network had abruptly suspended users from withdrawing, swaps, and transfers citing the current market crash for its decision.
Since then, the platform has provided little to no information for its users about when its services would be resumed. However, its CEO, Alex Mashinsky had revealed a vague statement on June 15 saying his team was “working non-stop.”
Per available information, Celsius is currently looking to investors for new financing. But with the new revelations, the lending platform is also considering the possibility of filing for bankruptcy.
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
Celsius had previously hired restructuring lawyers from Akin Gump Strauss Hauer & Felp LLP.
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.
Like Celsius, like others
Celsius is not the only crypto lender facing liquidity issues. Other firms like Voyager, BlockFi, and Three Arrow Capitals have been faced with liquidity challenges because of the current crypto market crash leading to talks of a bailout.
SEC commissioner Hester Peirce, in a recent interview, said that she is not in support of bailout for crypto companies. this view is also shared by Binance CEO Changpeng Zhao who said that bailouts for bad projects don’t make sense.
However, Sam Bankman-Fried-led firms have extended credit facilities to some of these companies under duress.