The crypto lending firm has brought in a second group of legal consultants.
- Celsius has brought in advisors to help it prepare for potential bankruptcy, according to the Wall Street Journal.
- Insiders say that consultants from Alvarez & Marsal are helping the company prepare a potential bankruptcy filing.
- Celsius disabled withdrawals on June 13 and has given clients little guarantee that it will restore access to funds.
Celsius is hiring consultants to prepare for possible bankruptcy, according to reports from the Wall Street Journal.
Celsius Could File For Bankruptcy
Celsius has brought in consultants from the management advisory firm Alvarez & Marsal to help it prepare for possible bankruptcy, according to insiders in contact with the Wall Street Journal.
Specifically, the firm is said to have hired restructuring consultants to provide advice on a potential bankruptcy filing.
The news has not been confirmed, as neither Alvarez & Marsal nor Celsius have responded to WSJ.
The Wall Street Journal previously reported on June 14 that the company had hired restructuring attorneys from another legal firm—Akin Gump Strauss Hauer & Feld LLP.
At that time, the WSJ said that Celsius’ attorneys would advise it on “possible solutions for its mounting financial problems” and did not mention bankruptcy. However, other reports took it as implicit that such consultants would advise on bankruptcy.
If Celsius does file for bankruptcy, it is unclear whether users will be able to access their funds. Fortune reported on June 14 that users may not be protected by deposit insurance. As such, clients may need to take legal action to obtain compensation.
Celsius Has Triggered Other Freezes
Eleven days ago, on June 13, Celsius froze withdrawals, transfers, and swaps. The crypto lending company cited “extreme market conditions” as its reason for blocking access to funds.
Celsius has said little to the public since it paused withdrawals on June 13. On Sunday, June 19, it suggested it was working to restore withdrawals but gave little guarantee.
The firm’s decision to pause withdrawals has also triggered service freezes at other firms. The crypto lending service Babel Finance and the crypto exchange CoinFLEX have both suspended withdrawals in the days since Celsius’ decision.
The DeFi service Bancor, meanwhile, has paused its loss protection mechanism without restricting any withdrawals.
Those companies all cited harsh market conditions as the reason for service suspensions. Bitcoin prices dropped to nearly $19,000 on June 18, a low not seen since December 2020.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies.
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