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    Home » Crypto News » Investors Not Looking to Bail Out Struggling Celsius Network (Report)

    Investors Not Looking to Bail Out Struggling Celsius Network (Report)

    Author: Anthonia Isichei

    Last Updated Jun 17, 2022 @ 06:49

    Celsius’ recent problems continue to spiral on with new reports claiming that former investors do not wish to pour any more funds.

    Amid the challenges plaguing the cryptocurrency lending firm Celsius Network, there are reports that investors may not provide more funds to bail the platform out of the troubled waters.

    No Investor Bail Out for Celsius

    According to the Wall Street Journal on Thursday (June 16, 2022), anonymous sources revealed that Caisse de dépôt et placement du Québec, a Canadian fund, and growth-equity firm WestCap Group, which led Celsius Series B funding round last year that raised $75 million, may not provide more funds to help the struggling crypto lender.

    Another source also noted that current investors are either willing to wait for a Celsius acquisition or a restructure of the platform. One person familiar with the talks between Celsius and its investors said, “few are feeling OK about things. There was more risk in this than fully appreciated.”

    The latest development comes amid Celsius being insolvent and facing a liquidity crisis. On-chain data has shown that the platform held a large amount of staked ether (stETH).

    Celsius took ETH deposited by customers and staked them on the Ethereum Beacon chain via the liquid staking protocol Lido and received stETH in return. The company then deployed these new tokens on other DeFi protocols to generate yield.

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    “Staked ETH has increasingly become decoupled from ether amid concerns over the delayed merge on Ethereum. Consequently, large holders have been dumping the coin, and this continues to dry up liquidity for any swaps from stETH back to ETH.”

    This means Celsius will find it difficult to sell its large stETH holdings on the open market. Such a situation has served to compound the firm’s liquidity crisis.

    On June 13, Celsius suspended withdrawals, swaps, and transfers between accounts. According to the lender, the tumbling crypto market caused the company to freeze withdrawals.

    Regulatory Trouble on the Horizon

    In a bid to solve mounting financial problems, Celsius Network recently hired restructuring lawyers from the law firm Akin Gump Strauss Hauer & Feld LLP.

    Following the withdrawal suspension, rival lending platform Nexo revealed that it is looking to acquire qualifying assets of Celsius. The latter has until June 20 to respond to the offer.

    Meanwhile, amid the issues facing Celsius, reports emerged that securities regulators in Texas, Alabama, New Jersey, Kentucky, and Washington are investigating the firm’s decision to halt withdrawals.

    A statement from the Texas State Securities Board enforcement director, Joseph Rotunda, said:

    “I am very concerned that clients – including many retail investors – may need to immediately access their assets yet are unable to withdraw from their accounts. The inability to access their investment may result in significant financial consequences”.

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    You Might Also Like:

    • celsius
      CEL Token Pumps Over 300%, Then Instantly Dumps
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      Nexo Wants to Buy Qualifying Assets of Celsius Network After Withdrawal Freeze
    • celsius_legal_cover
      Celsius Network Hires Restructuring Lawyers After Account Freeze: Report
    Tags: Celsius Network (CEL)
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    About The Author

    Anthonia Isichei
    More posts by this author

    Anthonia is a fintech writer who has been involved in the crypto space since 2017 covering developments across regulations, adoption, and several other aspects of the Industry. When not neck-deep in the crypto news cycle, Anthonia spends her free time globetrotting and playing video games.

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