Celsius reportedly hires ‘restructuring lawyers’ as bankruptcy speculation mounts, CEL pumps and dumps

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A torrid week for users and operators of the crypto lender Celsius Network (CEL) continues – with restructuring lawyers reportedly called in to help enact emergency measures. Meanwhile, CEL is on a roller coaster today.

The news, reported by the Wall Street Journal, comes after the lender faced massive liquidations, insolvency talks and threats of legal action. The company suspended trades, withdrawals and transfers between accounts on Monday as markets shuddered, risking the fury of investors.

The WSJ quoted ‘people familiar with the matter’ as saying Celsius had ‘hired restructuring attorneys’ from the law firm Akin Gump Strauss Hauer & Feld “to advise on possible solutions” to his “growing financial problems”.

The outlet suggested that restructuring is still the worst-case scenario for Celsius, which is “first seeking possible financing options from investors”. However, it seems to want a plan B, as it “explores other strategic alternatives, including financial restructuring”, according to “one of the people familiar with the matter”.

Both the law firm and Celsius executives declined requests for comment from the WSJ on the matter.

Social media-based observers claimed Celsius could file for bankruptcy. The work of restructuring lawyers often focuses on bankruptcy proceedings, but can also deal with a range of other financial matters, including new investments and debt rescheduling.

Earlier this week, Celsius said that he was “acting in the interest of our community”, which was his “top priority”.

Amid the confusion, a fake token claiming to be a Celsius network restart has also emergedwhile multiple reports have claimed that the company made a number of significant crypto moves before or at the time of the withdrawal suspension announcement.

On Reddit, community member r/CelsiusNetwork lamented that potential legal action could spell long-term pain for investors, notice:

“It could take years to settle now.”

Meanwhile, Adam Levitin, Anne Fleming Research Professor and Professor of Law at the Georgetown University Law Centerhad grim predictions about what might happen if Celsius went bankrupt, writing that “all foreign customers of Celsius as well as all domestic customers who chose to use the Earn product” had effectively “provided loans to Celsius”.

He wrote:

“That means they are unsecured creditors of Celsius. And they are going to get screwed. Unsecured creditors will get a proportional share of the remaining assets after all secured creditors have been paid and all bankruptcy administration costs have been paid (lawyers, financial advisors). It’s not a good place to live.”

He added that “the exercise now is all about mitigating losses and preparing for the storm of litigation to come.”

And crypto attorney Grant Gulovsen claims that while bankruptcy filings might be “convenient for directors and officers of Celsius”, it would not be for “counterparties who would likely prefer the terms of their various agreements with Celsius to remain out of public view”.

The price of CEL remains exceptionally volatile. As of 07:27 UTC, the token, now ranked 138th by market cap, was trading at $0.52 after falling from the briefly hit $1.42 earlier in the day. The price is still up nearly 66% in the past 24 hours, but down 23% in the past week and 48% in a month, however – amid a broader crypto crash that has engulfed the most major crypto-assets.

CEL Price Table:

Source: coincko.com

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Learn more:
– 100º Celsius: industry debates possible impact, lenders reassure users, Nexo offers help
– Celsius issues affect Nuri’s bitcoin interest accounts

– Celsius Adds More Collateral to Avoid Loan Liquidation, Faces ETH Compression
– Desperate Celsius Users Face Liquidations As Crypto Market Tanks, Solvency Debate Begins

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