Celsius Network takes positive steps to avoid bankruptcy
According to the Technology website CTechCelsius Network laid off 150 workers in a bid to stay operational.
The struggling lending and borrowing platform announced a pause in withdrawals on June 13, citing “extreme market conditions”. In the weeks leading up to the announcement, rumors swirled that the company was insolvent, a claim denied by CEO Alex Mashinsky at the time.
Since then, it has emerged that a major factor in the company’s downfall was its failure to manage risk appropriately. Commenting on the misfortunes of Celsius, Campbell-Harveyprofessor of finance at Duke University, said:
“Come on, given the volatility of this space, you need to do some basic stress testing.”
Similarly, beleaguered crypto investment platform Three Arrows Capital (3AC) filed for Chapter 15 bankruptcy on July 1. Many wonder if it’s only a matter of time before Celsius does the same.
Support line open for users to get in touch
Celsius users were left in limbo after the suspension of withdrawals was announced three weeks ago.
Since then, with the threat of bankruptcy looming, the company has gone silent, leading to further frustration from users.
On June 30, Celsius broke his silence by posting a blog update saying he was working to “stabilize liquidity and operations”. He went on to refer to taking the necessary steps to “preserve and protect assets” and exploring options such as “pursuing strategic transactions” and restructuring.
“We are focused and working as quickly as possible to stabilize cash and operations.”
The blog post also posted a helpline number and messaging service for users to get in touch.
The previous communication was on June 20when the company said it was working with regulators and authorities.
Does Celsius retaliate?
Despite Celsius’s patchy and vague communication, his actions suggest that management is intent on saving the company.
Although Celsius does not provide official numbers on its membership, its LinkedIn page gives a range between 501 and 1,000 employees. According to the business information search platform, Owl, Celsius has 850 employees. If so, the layoffs represent an 18% reduction in the workforce.
Similarly, Twitter account @BTCKYLE published that Celsius repaid $50 million to Aave on July 3, improving the loan health ratio and freeing up a significant portion of client funds.
*Updated 03/01/22* (BIG payment ✅)
Celsius repaid an additional $50 million for the Aave loan!
The new Loan Health Ratio ~2.76
— ₿TCKYLE (@BTCKYLE) July 3, 2022
The CEL token rebounded 43% on July 3 before hitting resistance at $1.03, leading to a daily close of $0.90. At the time of writing, CEL is trading down 0.4% from the previous day’s closing price.