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Citing “extreme market conditions” for blocking withdrawals, Celsius has appointed Citigroup and a law firm to advise on possible solutions.
Crypto loan platform Celsius Network has tapped Citigroup to advise on possible solutions following the abrupt halting of withdrawals by the crypto lender. According to a source familiar with the development, Celsius appointed the banking giant to help with potential financial options. However, the source clarified that this does not mean Citi will give Celsius money.
In addition to providing financial recourse to Celsius, Citigroup is also advising the leading crypto lender on acquisition offers from rival companies. For instance, crypto-transacting platform Nexo made an offer to procure any remaining qualifying Celsius assets. Nexo sent an official letter to the beleaguered crypto lender and specified June 20th as the deadline for a response. Nexo DeFi strategist Kiril Nikolov said:
“The Nexo team is in a strong financial and liquidity position, bootstrapped and having never raised external capital with a solid equity cushion, which is also visible in our real-time reserves audit available here.”
Nikolov also added that:
“Over the past couple of months, the Nexo team has been in the process of fully de-risking its DeFi exposure.”
Citigroup Has Worked Closely with Celsius Before
According to one of the inside sources, Celsius and Citigroup have some working history from before the recent development. The source said that Citi advised Celsius on its mining subsidiary’s business and initial public offering (IPO) plans. In May, Celsius announced that its wholly-owned Bitcoin mining subsidiary, Celsius Mining, discreetly submitted a key registration form to the Securities and Exchange Commission (SEC). This document, a draft registration statement on Form S-1, seems likely to see the SEC’s approval. The determinant factor is the Commission’s completion of a compulsory review process, as well as a few market conditions.
In addition to Citigroup, Celsius also hired restructuring attorneys from law firm Akin Gump Strauss Hauer & Feld LLP to provide financial solutions.
On Monday, the crypto-lending company had blocked customers from extracting funds from its platform following “extreme market conditions”. Soon after this account freeze, crypto exchange Binance moved to suspend Bitcoin (BTC) withdrawals for several hours. The combined effect as a result of both companies’ actions led to a further price reduction. BTC sank over 10% on Tuesday to an 18-month low of $20,823.56, according to data from Bloomberg.
US legislators have been deliberating on the ills of digital currencies following a price crash and how to protect customers. Only last week, a bipartisan duo of senators proposed a law that would protect customers should a crypto exchange declare bankruptcy. Part of this bill, dubbed the Responsible Financial Innovation Act, advocates for digital assets to be held separately. The bill also specifies that the Commodity Futures Trading Commission (CFTC) should be the official watchdog for digital currencies. This is a turn from the idea that it should be the SEC.