Days after firing 25 percent of its workforce, Celsius Network is gearing to fetch itself out of the market slump. The US-based crypto lending platform has hired a legal team from the Kirkland & Ellis LLP law firm to assist it in the process of its corporate restructuring. The newly onboarded legal team is also being tasked with easing the financial load on Celsius after the crash of Terra that ended up spiralling into the ongoing global crypto dip.
Kirkland & Ellis LLP is essentially replacing Celsius’ previously partnered law firm called Gump Strauss Hauer & Fend LLP.
The freshly appointed team of lawyers will advise the Celsius team on various options, which may include a bankruptcy filing option as well, The Wall Street Journal said in a report citing sources familiar with the matter.
Celsius has recently been sued by a former investment manager, who has alleged that the company used customer deposits to rig the price of its own crypto token and failed to properly hedge risk, causing it to freeze customer assets.
The complaint said Celsius ran a Ponzi scheme to benefit itself through “gross mismanagement of customer deposits,” and defrauded the plaintiff KeyFi Inc, run by the former manager Jason Stone, into providing services worth millions of dollars and refusing to pay for them.
The company’s new legal team will also be tackling this lawsuit.
On June 13, Celsius Network paused withdrawals, swaps, and transfers citing liquidity concerns.
The platform’s operational model offered crypto lending against high interest rates to those users who provided liquidity and committed their funds.
Just when the company began to face the wrath of the market slowdown, it also began seeing losses on the large amounts of staked Ether (stETH) it had in its accounts for lending people.
The reason why this happened was because Ethereum’s energy efficient update, the Merge is getting closer to its release after several delays — causing stETH to begin selling at discounted prices.
The Celsius Network resorted to laying-off 150 of its workers stationed in the US and Israel — as an immediate cost-cutting measure.
Not just the Celsius team, but other crypto lending firms also faced severe consequences of the dip in the crypto market.
Vauld, a Coinbase-funded crypto lending and trading platform also suspended all withdrawals, trading, and deposits on the platform around July 4.
The firm has hired Kroll as its financial advisor and Cyril Amarchand Mangaldas and Rajah & Tann Singapore LLP as its legal advisors in India and Singapore, respectively to discuss possibilities of a complete corporate shake-up.
In the last three months, the overall market cap of the crypto sector that stood at over $2 trillion (roughly Rs. 15,610,304 crore) around March, has tumbled down to its current figure of over $914 billion (roughly Rs. 72,62,109 crore).