Celsius (CEL-USD) is seemingly succeeding Terra Classic (LUNC-USD) as the new, big controversy overtaking the market. The company’s poor strategic maneuvering, shady dealings and alleged illegal activity are coming back to bite it. This week in Celsius crypto news sees the company reorganizing its legal team as it begins to undergo bankruptcy proceedings.
Celsius built up a name for itself as a platform for crypto trading, staking and lending. But almost as quickly as it rose to popularity, it came crashing down over the course of the last five weeks. Beginning the tumult was a withdrawal halt instituted by the company across its services; none of its 500,000 users could remove their funds. The move was highly criticized by investors, who likened the move to Robinhood’s (NASDAQ:HOOD) meme stock trading freeze early last year.
Adding fuel to the flames of controversy recently are some accusations from KeyFi, a DeFi aggregator. KeyFi reportedly worked behind the scenes, investing Celsius’ assets for the company. The platform had been identified as a Celsius business partner as part of Arkham Intelligence’s Celsius report — one which accused Celsius of mismanaging investor funds through high-risk trading.
The company is filing a lawsuit against Celsius for refusing to honor a handshake agreement between the two regarding KeyFi’s compensation. But more important to investors are claims by KeyFi that Celsius operates under a Ponzi scheme model.
Celsius Crypto News: Network Brings on New Lawyers
Celsius crypto news today sees the company bulking up its effort to right its wayward ship. Most notable is news of a legal team reshuffling. But also, it looks as though the company is taking measures to reduce its debt.
The company is hiring a legal team from law firm Kirkland & Ellis LLP to help it navigate a potential bankruptcy filing. This is not the first team for Celsius. Previously, it had hired consultants from advisory firm Alvarez & Marsal and lawyers from Akin Gump Strauss Hauer & Feld.
What’s interesting about this choice in legal team is Kirkland & Ellis’ recent work with Voyager Digital (OTCMKTS:VYGVF). The company fell in its own bankruptcy dilemma as a result of massive exposure to the Terra Classic network. The firm is helping Voyager to manage a debt ranging from $1 billion to $10 billion.
Attempting to get ahead of this debt and minimize the damage, Celsius is also reportedly paying down its debts to other DeFi platforms. Today, it paid off a $20 million debt owed to the Aave (AAVE-USD) platform. It’s a decent start for a company with a lot of repayments to make; Celsius owes approximately $215 million more to Aave and the Compound (COMP-USD) network.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.