Crypto Lender Celsius Hires Restructuring Lawyers, Same Firm That Assisted Voyager In Bankruptcy Filing: Report

Celsius was earlier sued by a former employee who accused the platform to use customer funds to manipulate the price of its CEL token.

Celsius promised exorbitantly high interest rates of up to 18 percent to customers.

Source : Facebook/Celsius

Celsius, the US-headquartered crypto lending platform, has reportedly hired the Kirkland & Ellis LLP law firm to help in its restructuring process. Celsius has been finding itself in troubled waters lately due to the ongoing crypto market meltdown. In June, it announced that it paused all crypto withdrawals citing “extreme market conditions.” Earlier this month, it announced that it has laid off 150 employees — nearly a quarter of its workforce. Now, a Wall Street Journal report suggests that Celsius has hired lawyers from Kirkland & Ellis to advise on its restructuring options.

The crypto lending platform has also reportedly hired lawyers to advise on a bankruptcy filing. 

Kirkland & Ellis is reported to be the same firm that has been tapped by Voyager Digital as general counsel for its own bankruptcy proceedings. The filing came a few weeks after Voyager issued a default notice to Three Arrows Capital, popularly known as 3AC, which is a Singapore-headquartered cryptocurrency exchange. The loan default, along with the current volatility of the overall crypto market has been cited as the reason behind the bankruptcy by Voyager CEO Stephen Ehrlich.

Celsius promised exorbitantly high interest rates of up to 18 percent to customers on their crypto deposits. As per a report by Bloomberg, founder Alex Mashinsky said Celsius was able to earn high rates itself in order to quell skepticism around the interest rates.

Last week, Celsius was sued by a former employee who accused the platform to use customer funds to manipulate the price of its eponymous proprietary token. The former money manager noted in his complaint that Celsius lost hundreds of millions of dollars by failing to hedge risk.

As per the complaint filed at a New York state court by KeyFi, Celsius was said to be struggling to cover the payouts and suffered “severe exchange rate losses.” KeyFi was founded by Jason Stone, a former Celsius money manager. In the complaint, Stone compared Celsius to a Ponzi scheme, alleging that the company had duped him out of potentially hundreds of millions of dollars in pay.

In a related development, blockchain analytics firm Peckshield tweeted that Celsius has repaid its debt to Aave, a decentralised finance (DeFi) lending protocol. As per the tweet, Celsius has transferred 20 million USDC token from its own wallet to Aave Protocol v2.

#PeckShieldAlert Celsius (0x8ace...130ee8) has repaid 20m $USDC on Aave pic.twitter.com/U7h1Lvyy5x

— PeckShieldAlert (@PeckShieldAlert) July 11, 2022

As per DeFi tracking platform Zapper, Celsius still owes nearly $130 million in USDC and $82,500 in REN to Aave, as first reported by CoinTelegraph. 

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