Embattled crypto lending platform Celsius Network is not on the brink of a bailout, according to a Wall Street Journal report citing people familiar with the matter.
Canadian pension fund CDPQ (Caisse de dépôt et placement du Québec) and New York-based WestCap Group led Celsius’s oversubscribed $750 million Series B funding round last year, which raised the firm’s valuation to $3.5 billion.
However, neither of them is reportedly willing to provide additional funds to Celsius, which earlier this week halted withdrawals from its platform.
“Few are feeling OK about things,” one person with knowledge of the negotiations between Celsius and its investors told the WSJ.
Commenting on the earlier investments into Celsius, that person said “there was more risk in this than fully appreciated.”
Nexo Proposes Buyout of Celsius Assets as Crypto Lending Rival Halts Withdrawals
Digital asset manager Nexo responded to the news of its rival Celsius pausing withdrawals by tabling a proposal for a buyout of certain of the firm’s liquid assets. Pointing to “what appears to be the insolvency” of Celsius, Nexo took to Twitter on Monday morning to post a letter of intent outlining its “potential interest” to acquire “certain remaining qualifying assets, mainly collateralized loan receivables secured by corresponding collateral assets, brand assets and customer database of the...
Celsius announced a $400 million Series B funding round in October last year amid intense scrutiny placed on crypto lending firms from local regulators, with another $350 million injected in the firm in November.
At the time, investors didn’t appear to be too concerned with the attention that crypto lending firms were receiving from the regulators.
“It’s quite typical for [regulators] to begin examining some of the market leaders in order to clarify their own rules. This is part of the process of regulating a new market,” Laurence Tosi, the founder of WestCap, said last October.
Investors weigh up options
Things are reportedly looking different now though, as investors are willing to either stand back, or let another company try to buy Celsius, according to a different person close to the discussions. Another possible option on the table is to simply let the business restructure; earlier this week, Celsius reportedly hired restructuring attorneys from the law firm Akin Gump Strauss Hauer & Feld LLP.
Embattled Celsius CEO Alex Mashinsky Breaks 3-Day Silence
Three days after crypto lender Celsius abruptly announced that it was pausing all customer withdrawals, swaps, and transfers, the beleaguered company’s CEO, Alex Mashinsky, has finally broken his silence on the matter. But Mashinsky offered little comfort to those hoping for answers as to when users will again be able to withdraw funds. Mashinsky took to Twitter this afternoon, speaking publicly for the first time since his company froze withdrawals Sunday night, to assure the Celsius communit...
In a blog post on Sunday, Celsius said it was pausing all withdrawals, swaps and transfers between accounts, citing “extreme market conditions.”
Rival company Nexo was quick to react to the news, coming forward with a bid to acquire Celsius’ “certain remaining qualifying assets.”
Up to now, neither Nexo or Celsius have provided additional comments on the matter, aside from Alex Mashinsky, the CEO of Celsius, taking to Twitter on Wednesday to state that his team is working “non stop” on the issue and to ask customers for patience.
The same day, Reuters reported that securities regulators in five states have opened investigations into Celsius' decision to freeze withdrawals.
