After blocking the withdrawals of its users, the Celsius protocol decided to start a complete restructuring of its activities. According to Wall Street Journal the protocol has already hired a law firm specializing in restructuring.
According to the newspaper, the contracted firm is Akin Gump Strauss Hauer & Feld LLP. The Citibank bank would also be helping in the task of revamping the activities.
In addition, they noted that the company is seeking help from its investors other than financial restructuring. In other words, the restructuring plan will probably not only mean making new investments.
With the proposal to offer attractive yields, Celsius has grown to become one of the biggest protocols in this market. In exchange for depositing cryptocurrencies, investors received returns that could reach up to 18.63% per annum.
Although the yield was not exaggerated, the market cast suspicion on the sustainability of the Celsius model. But until the looting block episode, suspicions were never deepened.
In general, loan protocols tend to do well in times of high market. But now that the moment is of falling prices, the problems tend to resurface.
And in this sense, Celsius may have to reorganize its entire income system, in search of a more sustainable model. So far, the protocol has not issued clear reasons for blocking withdrawals.
“CelsiusNetwork is working 24 hours a day for our community. It’s all hands on deck, so there will be no Twitter slots this week,” the protocol team said.
Settlement and fake token
As in every restructuring process, there are those who take advantage of it to try to scam the market. Now, it is the turn of a token called Celsius 2.0 (CEL2.0), which has supposedly started to circulate on the market.
Celsius warned that no new tokens were created by the platform. So CEL2.0 is not your creation, but it is likely to be a scam. The protocol’s official token ticker is CEL.
As for its market position, Celsius has added 6,000 Wrapped BTC (WBTC) to the Defi MakerDAO platform. The measure serves to prevent the protocol from having to settle its commitments and lose resources.
If the restructuring of Celsius doesn’t work, the company may have to consider the takeover offer made by rival Nexo on Monday (13). The company sent a letter to Celsius, offering to acquire all of Celsius’ assets and take over the protocol’s portfolio of more than 1.7 million customers.
Meanwhile, another cryptocurrency lending company – BlockFI – was fined $943,000 for failing to register its securities in the US state of Iowa. Neither Celsius nor Nexo have any records, and the BlockFi fine could set precedents for both.
Following the Celsius affair, US Securities and Exchange Commission (SEC) Chairman Gary Gensler urged investors to be wary of platforms that offer returns that are “too good to be true.”
Several senators introduced a bill last week aimed at protecting investors in the event that a cryptocurrency company eventually goes bankrupt.
According to the project, cryptocurrencies held by companies belong to customers. Therefore, companies will not be able to incorporate them as assets on their balance sheets.