- Crypto lender Celsius has hired lawyers to help it tackle its financial problems, the Wall Street Journal reported.
- Celsius froze all withdrawals from customer accounts this week, citing “extreme market conditions”.
- Its clients have raised more than $2.5 billion in assets this year as crypto prices fell, the FT reported.
Leading cryptocurrency lender Celsius Network has engaged lawyers to tackle a growing pile of financial problems, The Wall Street Journal reported Wednesday.
Celsius froze all withdrawals, swaps and transfers between accounts on Monday, citing market
and extreme market conditions, after crypto markets collapsed over the weekend.
The firm has now hired law firm Akin Gump Strauss Hauer & Feld to advise it on restructuring its finances and other strategic alternatives, the WSJ reported Wednesday, citing people familiar with the case.
Celsius takes deposits of clients’ cryptocurrencies and then lends the digital assets to other companies, such as hedge funds, and decentralized financing projects.
It offers high returns on deposits — up to 18% of annual percentage returns — and managed $11.8 billion in assets in May, according to its website. In December, it claimed to manage $24 billion worth of crypto, according to the Financial Times.
But clients have taken more than $2.5 billion in assets from the platform this year as cryptocurrency prices plummeted, the FT reported. Celsius did not respond to Insider’s request for comment.
The company took the unforeseen step to freeze account activity after bitcoin plunged nearly 19% over the past weekend, in a broader crypto route, fueled by investor concerns about interest rates.
“We are taking this necessary action on behalf of our entire community to stabilize liquidity and operations, while taking steps to preserve and protect assets,” Celsius said in a blog post at the time.
The cessation of redemptions was seen as a warning sign, and the move shook up the crypto market, fearing Celsius’s troubles would spread to other digital assets.
“Many think this is mainly due to fears surrounding the insolvency risk of one of the largest lending platforms, Celsius,” said GlobalBlock strategist Marcus Sotiriou after the crypto sell-off intensified on Monday.
Customers of the five-year-old company told Insider they have no idea what will happen to their money, with one saying they have captured $105,000 worth of solana on the Celsius platform. In DeFi, customers don’t have the same protection as traditional accounts.
Regulators have previously questioned Celsius about its high-yield products, which some have compared to a Ponzi scheme. The states of New Jersey, Texas and Alabama all imposed shutdowns on the company last year, according to Bloomberg.
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