According to the latest Wall Street Journal article, the struggling crypto funding service, Celsius Network, could be planning to declare bankruptcy after hiring structural advisors from consultancy company Alvarez & Marsal.
Celsius Network unexpectedly banned customer withdrawals, swaps, and exchanges in early June, claiming the present market collapse to be the reason.
From this moment on, the site has given its consumers no details related to restoring its services. Meanwhile, on June 15, its CEO, Alex Mashinsky, published an unclear remark stating that his staff was “working 24/7.”
According to readily viewable data, Celsius is now seeking fresh funding from investors. However, judging from the scenario, the lending site is discussing the option of declaring bankruptcy.
The terms claim that if Celsius declares bankruptcy, undergoes liquidation, and is somehow reluctant to meet its debts, any Qualifying Digital Assets utilized as the security under the Borrow Program may not be retrieved, and there might be no effective claims or interests concerning Celsius.
Celsius had around 1.5 million members during its peak, promising up to 18% profits on consumer funds. Since May 2022, the company has reported having over $12 billion in assets under management.
SEC Commissioner Not In Favor Of Bailouts
Celsius wasn’t the only cryptocurrency lender experiencing liquidity concerns. Several other organizations, such as Voyager, BlockFi, and Three Arrow Capitals, reportedly encountered volatility issues. This was witnessed due to the recent crypto market collapse, raising speculation of a bailout.
During the latest interview, SEC commissioner Hester Peirce stated that she is not in favor of bailouts for cryptocurrency firms. “Bailouts for failing ventures,” according to Binance CEO Changpeng Zhao, do not sound right.
Eventually, amid the ongoing stress, Sam Bankman-Fried-led offered financial assistance to several such companies.