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Home»Crypto»Celsius hires Citigroup to handle financial difficulties
Crypto

Celsius hires Citigroup to handle financial difficulties

Donald MunnBy Donald MunnJune 18, 2022Updated:September 29, 2022No Comments3 Mins Read
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Celsius has reportedly hired banking giant Citigroup to advise it in an attempt to find possible solutions to its financial problems. 

Citigroup will act as financial advisor to Celsius

This was revealed by two anonymous sources familiar with the matter.

Celsius’ financial problems immediately appeared serious when it announced a few days ago that it had suspended all withdrawals. 

.@CelsiusNetwork is pausing all withdrawals, Swap, and transfers between accounts. Acting in the interest of our community is our top priority. Our operations continue and we will continue to share information with the community. More here: https://t.co/CvjORUICs2

— Celsius (@CelsiusNetwork) June 13, 2022

Four days have now passed and the withdrawals have not yet been rehabilitated, but the company says that the earn program is still in place. 

This creates much concern, as many suspect that the problems are caused by the earn program itself, and in particular by the significant annual interest rates paid by the company to those who decide to deposit their funds with them. 

Celsius has never yet claimed that it does not have enough money to return to its customers all the funds they deposited, plus interest, but the official justification for the incident, i.e. trying to “stabilize liquidity”, seems to suggest precisely such a scenario. 

At this point, it seems quite logical that they decided to seek help from experts in the financial sector to manage such a crisis. 

The assumption is not that Citigroup would lend money to Celsius to cope with the liquidity crisis, but to get advice on how to find potential financing.

One of the two anonymous sources also revealed that Citigroup advised Celsius to consider the takeover offer received from rival Nexo, mainly concerning their portfolio of secured loans.

Citigroup has advised Celsius in the past, notably on the upcoming IPO of one of its mining subsidiaries, Celsius Mining.

Celsius struggles to cope with the company’s liquidity crisis

In addition to the famous US bank, Celsius has also hired the corporate restructuring lawyers of the firm Akin Gump Strauss Hauer & Feld. 

The situation therefore seems decidedly critical, so much so that at the moment it seems unrealistic to imagine that they will be able to reactivate withdrawals any time soon. 

In the week prior to the blocking, the daily volume of withdrawals had already been high, sending the company’s solvency into crisis. Celsius had stopped publishing the weekly reports on its Twitter profile, perhaps in an attempt to curb withdrawals, but had nevertheless continued to publish them on other channels. 

The “bank run” has sent the company’s liquidity into crisis, making it impossible to satisfy all withdrawal requests. 

It is not certain that Citigroup will be able to help Celsius repay all its debts, and give investors back all their funds, including interest, but at least, as far as the CEL token is concerned, the crypto markets do not seem to be upset, as its price has almost returned to the levels before the collapse due to the withdrawal blockade. 

Still, the price remains 12% lower than a week ago, 34% lower than a month ago, and even 93% lower than the all-time high of a year ago.

The post Celsius hires Citigroup to handle financial difficulties appeared first on cryptodailynews24.com.

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Donald Munn
Donald Munn
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