Celsius’ CEL token skyrocketed almost 200%, briefly pushing the price above $1. However, the price immediately stabilized near the $0.50 level, leaving the rally to nearly 75% in the last 24 hours. It happened after DeFi crypto lender Celsius Network hired restructuring lawyers from the law firm Akin Gump Strauss Hauer & Feld LLP.
In fact, Celsius plans to raise funds from investors but also looking at other options, including restructuring to limit financial harm and improve the business operations.
Celsius Hires Restructuring Lawyers Amid Rising Financial Issues
Celsius Network due to financial constraints has hired restructuring lawyers from the law firm Akin Gump Strauss Hauer & Feld LLP, reported Wall Street Journal on June 15.
On June 13, Celsius announced pausing all withdrawals, Swaps, and transfers between accounts due to extreme market volatility. After the announcement, Celsius’ CEL token plummeted by nearly 70% causing the crypto market to crash.
However, in the last 24 hours, the Celsius (CEL) token price has jumped more than 200% backed by a massive trading volume of 250% making a high of $1.17. The CEL token is currently trading at $0.5216, up nearly 75%. The decision to pause withdrawals and transfers led to some relief, while the firm looks to solve its mounting financial problems. However, the major fluctuations might be due to the liquidation of short-sellers and signs of solvency.
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Celsius managed $11.8 billion in assets as of May 17, according to its website. It offers annual percentage yields of up to 18.63% on cryptocurrency deposits to its 1.7 million users.
With restructuring as the first step to prevent bankruptcy, the company might be looking for bankruptcy too if restructuring plans fail. Moreover, Celsius has already warned its customers that they might not be able to recover their digital assets in the event of bankruptcy.
How stETH Depeg Induced Fall of Celsius
DeFi platform Celsius had locked customer funds into stETH, a token that represents ETH locked on the Ethereum 2.0 beacon chain. The recent stETH depeg from ETH caused a wave of redemptions, sparking a liquidity crisis. The depeg caused heavy selling pressure on stETH, which threatened the positions of Celsius. As a result, the firm too started liquidating stETH tokens for ETH.
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