Celsius collides with lawyers for bankruptcy according to Chapter 11: Report

Celsius collides with lawyers for bankruptcy according to Chapter 11: Report

The competitive crypto loan Celsius Network hopes that a demonstration of the support of his users will preserve him from bankruptcy.

Celsius, which has been plagued by a liquidity crisis for weeks, resists the instructions of his own lawyers to register bankruptcy in accordance with Chapter 11. Matter familiar people.

reports that users can demonstrate their support by " Hodl mode "in their Celsius accounts-a security function for customers who do not want to withdraw or transfer money over a longer period of time.

Celsius has blocked withdrawals and transfers on the platform since June 12, but users can still show confidence in the network by initiating the Hodl function, the report says. Despite the payment restrictions, Celsius continued to receive some customer deposits.

The situation of Celsius initially triggered fears that the defeat could affect other companies in the crypto industry in an already difficult market environment. The rival Blockfi was hit by liquidity problems shortly after Celsius when insolvency rumors led around the crypto hedge fund company Three Arrows Capital.

"We are experiencing the greatest crypto crash in history," said Louis Schoeman, Managing Director of Forexsuggest. "In view of the massive inflation data and the semi-collapse of the Celsius network, which drives the downward spiral, I think that only the best fundamentally strong crypto projects will survive this bear market."

In order to explore possible financing options, Celsius reports that the bank giant Citigroup, the law firm Akin Gump Strauss Hauer & Feld and management consultant from Alvarez & Marsal.

high return, high risk

Celsius was introduced in 2017 and was popular with small investors because it paid lucrative interest rates for crypto of up to 18.6 %. The interest rate is earned by the alleged lending of cryptocurrency to institutional investors and by decentralized financial protocols.

Celsius should have taken a high risk to offer so high returns in a low interest rate environment.

Data to do so website that calls users to "lend loans like a billionaire", shows that the company has been awarded more than 8 billion US dollars to customers and almost $ 12 billion in May Used US dollars.

"If Celsius becomes unable to pay, this will mean a hard blow for the industry, especially with regard to the trust of small investors in the industry and a possible contagion in the entire industry," said Mads Eberhardt, cryptocurrency analyst at Saxo Bank.

The Cel-token from Celsius is currently changing the owner for about $ 0.74 after he has lost half of his value in the past week . CEL crashed to $ 0.24 shortly after it had frozen the withdrawals - 97 % below his record high of $ 8.05, which was recorded a year earlier.