What Comes Next for Celsius Network?
Celsius network will undergo restructured (for 98 % sure)
Before we discuss more about Celsius Network undergoing restructured, I'll give you a brief explanation of what is Celsius Network. Celsius Network is a bitcoin lending firm. Celsius, headquartered in Hoboken, New Jersey, has operations in four countries and works internationally. Users may deposit a variety of cryptocurrency digital assets, including BTC and ETH, into a Celsius wallet to receive a percentage yield or borrow money using their cryptocurrencies as collateral. As of May 2022, the organization has lent out $8 billion to clients and managed about $12 billion in assets.
Last week, Celsius Network decided to suspend all withdrawals due to “extreme market conditions” as Bitcoin plunged below $20.000. They decided to hire restructuring lawyers to help them find solutions for their current conditions.
So, What exactly is restructuring? What does this mean for “depositors” whose assets are still frozen? Is it possible to receive your money back?
A firm restructures to modify its financial and operational elements. This occurs when the company is under severe financial stress. Hiring a legal firm to help with restructuring is an open acknowledgment that the company is in serious difficulties (Celsius Network has hired a law firm to explore restructuring options ). Restructuring is a sort of business activity that includes dramatically altering a company’s debt, operations, or structure in order to minimize additional financial harm to Celsius.
The Celsius Terms and Conditions explain unequivocally that it is an unsecured loan to the firm, not a deposit in a bank. An unsecured loan is when one person loans money to another without receiving any collateral. Your down payment is essentially a loan. Users are owed money. The debtor is Celsius. The connection between a bank and its depositors is vastly different. Celsius purposefully concealed a distinction in small text. Celsius previously only had a proven liquidity problem. This implies they won’t be able to satisfy withdrawal requests right away, not because they don’t have the cash, but because they’re stuck someplace.
When a firm is having difficulty paying debt payments, it will frequently combine and change the terms of the loan in a debt restructuring. A debt restructuring is a method of avoiding default. Default occurs when a company fails to repay interest or principal on existing obligations, such as by negotiating cheaper interest rates. When a firm is in terrible form, debt restructuring is a less expensive alternative to bankruptcy. That is the good news. Celsius still has money. Just not enough for everyone (I’m sure of it). A blocked “deposit” can still be withdrawn; however, the amount received back will be smaller, and we do not know when withdrawals will continue.
As a result, debt restructuring helps both Celsius’s users and Celsius itself. Users might expect some withdrawals in the future, and Celsius can continue to operate after this disaster.
