Believers of Celsius Crypto Have a Plan to Avoid Bankruptcy
From the source, a potential solution is that Celsius will reopen withdrawals and set a ceiling on customers’ monthly withdrawals. A storm is brewing at Celsius. Its potential plan is to file for bankruptcy. Some people involved in the negotiations instead promoting the use of its customer base to seek support.
According to the Wall Street Journal on June 24, while Celsius was coping with the recent sharp decline in the value of digital assets, the troubled company also came under pressure – it hired a restructuring consultant from the consulting firm Alvarez & Marsal to help it file for possible bankruptcy. It is reported that Akin Gump Strauss Hauer & Feld’s lawyer is also providing advice to the bosses.
According to two people familiar with the matter, the relationship between Celsius’ external consultants and senior staff has become increasingly tense. Instead, some people involved in the negotiations have pushed the company to consult its 2 million-strong customer base to decide how to proceed. From these people, one option is to reopen withdrawals on a limited basis to protect Celsius’ residual liquidity.
Another Crypto Winter
Bitcoin has collapsed to about $20000 in recent weeks, plunging the industry into another potential “crypto winter”. Celsius was an early victim of the crash – it announced on June 12 that it had blocked withdrawals from its platform on the grounds of “extreme market conditions”. As of May, it had lent more than $8billion to customers and managed $12billion in assets.
Therefore, customers cannot withdraw or transfer bitcoin and other cryptocurrencies on the network of Celsius within two weeks.
The source said that the rift between those involved in the negotiations was growing. Bosses, including CEO Alex Mashinsky, were pushed into standard bankruptcy proceedings by lawyers, while others wanted to ask whether Celsius‘ customers wanted it to reopen withdrawals, albeit in a limited way.
Celsius “HODL” Function
They said that the “HODL” function of the Celsius application is a way to make an impromptu vote on how to work. The consultants told the company that it was not allowed to communicate with clients because they might be seen as biased in the event of bankruptcy.
According to the source, a potential solution is to reopen withdrawals and set a ceiling on the amount customers can withdraw each month, so that Celsius will not be overwhelmed by the run on assets. They said that customers would be asked to turn on or off hodl mode to show their approval or disapproval of the potential rescue plan.
They added that this will provide a better long-term solution for retail investors. They hope to retain their cryptocurrency in the form of tokens. They hope that in the long run, the value will rise again, rather than returning a large amount of exhausted money in the form of legal currency. They said that this will be the final result of traditional bankruptcy applications.
In this case, the client will be “the last person to be paid, the lawyer will take their money, we will first pay others’ money, and then they will get something,” a source said. However, the source added that if the company could negotiate with its customer base and institutional investors, “we can make you complete again. This is a typical liquidity problem”.
In a blog post on June 20, Celsius said, “we want our community to know that our goal is still to stabilize our liquidity and business. This process will take time.”. It also said that it planned to continue to work with regulators to discuss its suspension of withdrawals and other transactions, as well as its “determination to find a solution”.