The cryptocurrency lending platform Celsius is brewing an internal storm, with news of CEO running away and filing for bankruptcy one after another.
Two withdrawals of liquidity
Liquidity has been withdrawn twice since Celsius suspended withdrawals, exchanges and transfers on June 13.
The most recent one was on June 28. According to the data of PeckShieldAlert, the suspected Celsius-related address (0x3b6543ebe26824bd8156a103063f56ce50f88080) has withdrawn about 12,880ETH liquidity on its Bancor platform, and only about 7183ETH has been withdrawn.
Prior to June 23, the suspected Celsius address had withdrawn 2,000 ETH of liquidity on its Bancor platform, and only got back about 1,150 ETH.
Refuse bankruptcy, enable “HOLD” mode
Celsius Network has hired more advisers to prepare for a potential bankruptcy, The Wall Street Journal reported on June 24. Celsius has hired restructuring advisors from consulting firm Alvarez & Marsal to advise on a possible bankruptcy filing, and has contacted law firm Akin Gump Strauss Hauer & Feld LLP to advise on a possible restructuring plan, the sources said.
However, the latest news from The Block shows that Celsius Network has rejected a proposal by its lawyers to file for bankruptcy protection under Chapter 11 of the U.S. “Bankruptcy Code”, and instead hopes to seek customer support. Celsius believes many of its retail customers would prefer the company to avoid bankruptcy, and users can show their support by using “HODL mode” in their Celsius account, which Celsius describes on its website as a “safety feature,” the people said. Enables you to temporarily disable outgoing transactions from your Celsius account”. Once the mode is activated, clients cannot withdraw or send funds. After deactivation, users must wait 24 hours to restore these features.
Celsius believes that this will provide a better long-term solution for retail investors who want to keep their cryptocurrencies in token form, hoping that the value will rise again in the long run, rather than significantly reducing returns in fiat currencies.
CEO running away?
Celsius Network CEO Alex Mashinsky tried to leave the country via Morristown Airport in the US last week with plans to travel to Israel, but was blocked by authorities. It was unclear whether he was arrested or barred from leaving.
In response, a Twitter user named “Zach” said: “Consistent with our previous information, all Celsius employees, including our CEO, are focused on hard work to stabilize liquidity and operations. To this end , any reports of Celsius CEO trying to leave the U.S. are false.”
It is reported that Zach worked at Celsius for three years and helped create the Celsius community.
Notably, Alex Mashinsky’s social media updates stopped on June 16, “The Celsius Network team is working nonstop. This is a difficult time, and your patience and support means everything to us.”
Goldman Sachs buyout?
Goldman Sachs is seeking to raise $2 billion from investors to buy distressed assets in cryptocurrency lender Celsius Network, it was reported on June 25. If Celsius files for bankruptcy, Goldman Sachs could buy Celsius’ assets at a fraction of the price through this potential acquisition. Goldman Sachs is evaluating interest from Web3 crypto funds, funds focused on distressed assets and traditional financial institutions.
BitMEX founder Arthur Hayes said don’t believe Goldman Sachs is putting its money at risk unless it makes it clear. What Goldman is doing is consulting what banks should be doing, bringing together a group of investors and helping them frame the purchase of distressed assets for huge fees. If the tool does actually acquire assets from Celsius Network and enable withdrawals again, the community can rejoice that creditors get some of their money back, Hayes said. This will restore market confidence and provide more support for the cryptocurrency to start a bull run. But again, he cautioned that any and all bailouts should be viewed as PR stunts until actual funds are deployed and actual savers can withdraw some or all of their funds from the bankrupt centralized crypto lender.