Here’s what happens if Celsius prepares for bankruptcy

Embattled crypto lender Celsius is at high risk of insolvency and could file for bankruptcy. Meanwhile, the company and its subsidiaries are trying everything, including debt repayment, restructuring, and shorting the CEL to avoid bankruptcy.

FUD rose after the bankruptcy filings of Voyager Digital and Three Arrows Capital. Despite paying weekly rewards, withdrawals are still on hiatus. Additionally, Celsius and its CEO Alex Mashinsky have not clearly commented on available options or disclosed their plans for customer funds.

Entities to interfere if Celsius prepares for bankruptcy

Celsius’s decision to freeze customer accounts has had repercussions in the industry, raising questions about what will happen to customer funds. According to Celsius’s terms and conditions, if the company goes bankrupt, customers will not receive their funds. Restructuring advisers hired by the company have recommended filing for bankruptcy, but CEO Alex Mashinsky and management continue to find other solutions.

The company contacted its shareholders for possible solutions after FTX refused to bail out Celsius. One of the most important takeover options comes from Celsius’ major shareholder, BnkToTheFuture, and its CEO, Simon Dixon. The “Depositors First” plan offers three proposals to recover Celsius through restructuring, rebuilding, or fundraising from Bitcoin whales and the community.

Right now, the community is pinning high hopes on Simon Dixon to make depositors whole. BnkToTheFuture may call a general meeting to force proposals.

In his recent tweetSimon Dixon said:

“IF Celsius Networkmove on to Chapter 11, we have a top team to support #DepositorsFirst – We have a strategy, we have the ears of the board, and we will have the ears of Chapter 11 as we prepare. In this case, the strategy is not to empty the deposits. »

Additionally, investment bank Goldman Sachs is seeking to raise $2 billion to buy the assets of crypto lender Celsius, if it prepares for possible bankruptcy. This will incentivize Goldman Sachs investors to acquire Celsius’ assets at very attractive prices.

According to a recent filing, Celsius named Alan Jeffrey Carr, CEO of distressed investment management firm Drivetrain, and David Barse CEO of XOUT Capital, as directors. The company also fired directors John Stephen Dubel, Laurence Anthony Tosi and Gilbert Nathan. Directors newly appointed to the board may seek to prevent a bankruptcy filing.

In the event of bankruptcy, customers will be considered unsecured creditors and will not have a great chance of winning a lawsuit against Celsius.

Crypto Lender is actively repaying its outstanding loan

Currently, Celsius is actively repaying outstanding loans from Maker, Aave and Compound. Additionally, the company removed ETH positions from Bancor’s liquidity pools and transferred ETH to wallets for possible dumping.

According to data from DeFi Explore, Celsius’ multi-collateral DAI vault 25977 now has an outstanding debt of 41.2 million DAI. The liquidation price of wBTC fell to $2,722.11 after a nearly $180 million Maker loan in July. In addition, the guarantee rate jumped by more than 1000%, with 21,962 WBTC as collateral.

Varinder is a technical writer and editor, technology enthusiast, and analytical thinker. Fascinated by disruptive technologies, he shared his knowledge on blockchain, crypto-currencies, artificial intelligence and the Internet of Things. He has been associated with the blockchain and cryptocurrency industry for a substantial period of time and currently covers all the latest updates and developments in the crypto industry.

The content presented may include the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.

Comments are closed.