Celsius News: It Recruits New Lawyers who are “More Amenable” to Bankruptcy Avoidance Strategies
Celsius News: In the past, the crypto lender had a disagreement with previous financial advisors over how to handle financial challenges. During the latest crypto crisis, Celsius’ legal team had disagreements over how to handle the financial chaos.
Former lawyers Akin Gump Strauss Hauer & Feld clashed with the struggling crypto lender, which led to the hiring of new counsel from Kirkland & Ellis to help with any restructuring discussions.
A drop in bitcoin prices caused Celsius to restrict withdrawals from its platform, leaving consumers unable to access their wallets, and the company sought restructuring advice from Akin Gump in June.
Sources told Financial News at the time that problems arose when Akin Gump spent several weeks encouraging Celsius’ top brass to declare for bankruptcy. Senior Celsius executives, on the other hand, wanted to look at alternative options, such as tapping into the company’s client base.
Inquiries have been made to both Kirkland & Ellis and Akin Gump, who were not immediately available for comment.
The Celsius app’s “HODL” function was used to poll Celsius customers on whether or not they wanted the company to remain operating. Reopening withdrawals in an effort to limit the amount of money Celsius consumers can withdraw each month would be the ultimate goal.
Company’s Efforts to Avoid Bankruptcy
Kirkland & Ellis lawyers, according to an insider, are more open to the company’s efforts to avoid bankruptcy. Voyager Digital, another crypto lender, filed for bankruptcy on July 6th, and Kirkland & Ellis is serving as restructuring counsel to that firm as well.
On the same day that KeyFi filed a complaint alleging that Celsius had misled clients by inflating the value of the cryptocurrency they had deposited to boost the value of its own token, Celsius changed legal advisers.
Between August 2020 and March 2021, KeyFi served as Celsius’ investment manager; however, the firm has now filed a lawsuit against the lender to recover profit-sharing payments it claims are owed.
CEL tokens were valued at hundreds of millions of dollars at their peak, and Celsius CEO Alex Mashinsky is alleged to have personally profited from this.
According to KeyFi’s CEO Jason Stone, the lender owes him “millions of dollars” after failing to honor what he called a “handshake” profit-share agreement on various investment methods. KeyFi has accused Celsius of functioning as a “Ponzi scheme.”
Celsius’ new legal team was previously reported on by the Wall Street Journal.
Requests for comment from Celsius were not returned. On its blog, it stated that it was taking “essential efforts to preserve and defend assets” as well as “exploring all options available to us.”
“Our engagement with the community and our customers has been a source of pride for all Celsius team members, and we will continue to share information with our customers as and when it becomes appropriate,” the business said at the time.