Crypto lender Celsius hires lawyers to help restructure finances, after freezing customer deposit withdrawals: report

0

Leading crypto lender Celsius Network has brought in lawyers to help with a growing slew of financial problems, The Wall Street Journal reported on Wednesday.

Celsius froze all withdrawals, trades and transfers between accounts on Monday, citing market volatility and extreme market conditions, after crypto markets crashed over the weekend.

The company has now hired law firm Akin Gump Strauss Hauer & Feld to advise it as it considers restructuring its finances and other strategic alternatives, the WSJ reported Wednesday, citing people familiar with the matter.

Celsius takes customer deposits in cryptocurrencies and then lends the digital assets to other companies, such as hedge funds and decentralized finance projects.

It offers high returns on deposits of up to 18% annual percentage return and managed $11.8 billion in assets in May, according to its website. In December, he claimed to manage $24 billion in crypto, according to the Financial Times.

But clients withdrew more than $2.5 billion in assets from the platform this year as cryptocurrency prices fell, the FT reported. Celsius did not respond to Insider’s request for comment.

The company took the unannounced decision to freeze account activity after bitcoin fell nearly 19% over the past weekend, in a broader crypto rout driven by investor concerns over cryptocurrency rates. interest.

“We are taking this necessary action for the benefit of our entire community to stabilize liquidity and operations while taking steps to preserve and protect assets,” Celsius said in a blog post at the time.

“Many believe this is mainly due to fear surrounding the risk of insolvency of one of the biggest lending platforms, Celsius,” GlobalBlock strategist Marcus Sotiriou said after the crypto selloff intensified. Monday.

Customers of the five-year-old company told Insider they had no idea what would happen to their money, with one claiming they had $105,000 of solana trapped on the Celsius platform. In DeFi, customers do not have the same protections as with traditional accounts.

Regulators have previously questioned Celsius about its high yield products, which some have likened to a Ponzi scheme. The states of New Jersey, Texas and Alabama all imposed a cease and desist order on the company last year, according to Bloomberg.

Share.

Comments are closed.