Celsius Network is resisting its lawyers’ recommendation to file for Chapter 11 bankruptcy. Instead, the executives of the crypto company are seeking support from users to settle the internal disagreement to tackle the lawsuit.
People familiar with the matter revealed that the executives believe that most of Celsius Network’s retail clients will frown at the Chapter 11 bankruptcy. To that end, users can support the company by engaging the “HODL Mode” in their Celsius account. The Hodl Mode, according to Celsius, is a security feature that allows users to temporarily halt outgoing transactions from their accounts. Customers can control the HODL Mode at will, especially if they do not plan to withdraw or transfer funds from their accounts for some time.
Celsius Network’s Executives Object Chapter 11 Bankruptcy Suggestion
On the other hand, Chapter 11 Bankruptcy means a company may continue operating while working out its debts. It is simply referred to as reorganization bankruptcy. Anonymous sources said Celsius believes that resisting bankruptcy will create more value for account holders. At the same time, the company will have time to sort trades stuck in illiquid positions.
Specifically, activation of the HODL Mode will temporarily disable certain features, such as the inability to withdraw funds. Other disabled features include the inability to send funds through CelPay and the inability to change whitelisted withdrawal addresses. Users will need to wait for 24 hours after deactivating the HODL Mode for the reinstatement of the suspended functionalities.
Coinspeaker had earlier reported that Celsius hired a law firm to help reconstruct its financial situation. The report says the company employed lawyers from Akin Gump Strauss Hauer & Feld LLP. Reports also showed that the crypto company appointed Citigroup (NYSE: C) to advise its financial options.
Celsius Network Seeks Users Support
Seeking users’ support is the latest move from Celsius after freezing clients’ withdrawals. The lender wrote a memo to the members of the Celsius community on the 13th of June, announcing the withdrawal suspension. It added that the decision was made due to “extreme” market conditions. In addition to halting withdrawals, the company also paused Swap and transfers between accounts.
Notably, the company’s lawyers had advised against making any public announcement. Celsius native token, CEL, is currently down 6.89% to $0.7505. Although the token has declined, it had rebounded from its initial loss of $0.44 when the company announced the suspension of withdrawals.