Celsius explores solutions to liquidity crisis

Key learning points

  • Celsius has announced it is exploring plans to help the company regain its solvency amid the ongoing liquidity crisis.
  • Celsius says it is exploring strategic transactions, liability restructuring and other courses of action.
  • The company suspended withdrawals, swaps and transfers on Sunday, June 12 with no reopening date.

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Celsius has provided an update on the current service shutdown and announced new plans to recover.

Celsius Hints on Recovery Options

Celsius suspended withdrawals, swaps and transfers on Sunday, June 12. Now it is looking for ways to regain solvency.

The firm said today that it is “taking important steps to preserve and protect assets and to explore options”.

In particular, Celsius said it could pursue strategic trades. This usually refers to transactions with other companies in the same category as mergers and acquisitions.

Celsius also said today it could restructure its commitments. This means that the company can reduce or renegotiate the terms of the debt with various counterparties it is involved in.

However, those details are based on the standard definition of the terms, as Celsius has not fully described its plans.

The company says it is also exploring other options, noting that its “exhaustive explorations are complex and time-consuming”. It says it is working with experts in various fields.

Crisis lasted eighteen days

Celsius is now 18 days into its liquidity crisis and has just another update for today.

That update revealed very little information about the situation, other than Celsius was exploring options. However, several other sources have since detailed possible developments.

Most importantly, other companies seem to be considering actions to keep the crypto lending business afloat. Nexo has made an unsolicited buyout offer, while Goldman Sachs may be willing to buy Celsius assets for $2 billion. Reports today that FTX has struck a deal to buy the company.

Other reports point to internal developments: some suggest that the company hired consultants in case of bankruptcy; others say the company is under investigation by state regulators

The end of the crisis is not yet in sight. Future developments will determine whether Celsius can reopen withdrawals or whether customers will have to settle through legal action.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies.

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