Celsius Seeks Advice From Citigroup After Freezing Withdrawals, And Regulators Are Watching Closely

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Celsius Seeks Advice From Citigroup After Freezing Withdrawals, And Regulators Are Watching Closely By Hannah Perez

Citigroup bank is reportedly advising the crypto lender after freezing withdrawals on Monday. Meanwhile, the SEC does not lose sight of anything.

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  • Celsius seeks advice from financial giant Citigroup.
  • After the withdrawal pause, US regulators are watching closely.
  • Layoffs and rumors of insolvency generate fears in the market.

The service of loans with cryptocurrencies, Celsiusis apparently seeking support from a reputable financial institution after announcing a pause in its withdrawals.

According to reported The Block, Celsius would be seeking advice from the financial giant Citi Group, based in New York, to evaluate possible solutions to your alleged problem of insolvency. On Sunday, the crypto lending platform informed its clients that it was pausing withdrawals, trades, and transfers due to “extreme market conditions“.

Celsius it has faced inconveniences in meeting the withdrawals of its clients in recent days, which has led to rumors that the firm is facing insolvency problems; although, in the past, the platform had denied being in a liquidity crisis.

Celsius asks Citigroup for advice

According to today’s report, Celsius has hired Citi Group in “advisor capacityAccording to sources familiar with the The Block. However, it does not mean that the bank is going to rescue Celsius your liquidity problem. “It’s not like Citi is going to give Celsius money from their balance sheet.“, assured one of the people with knowledge in the matter.

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The publication highlighted that Citi Group would be advising the crypto firm on options of “potential financingas well as on offers like that of its rival Nexuswhich expressed interest in acquiring the asset portfolio of Celsius.

Shortly after the announcement of the measure of Celsius Sunday, Nexus offered the platform to buy some of its assets. Although he did not detail a figure, he said that he was especially interested in acquiring his “secured loan portfolio”.

According to The Blockthis is not the first time that the banking giant and Celsius collaborate. Citing the statements of the sources, the report advanced that citi had previously advised the platform on the business and initial public offering (IPO) plans of its mining subsidiary, Celsius Miningwhich filed with US regulators in May with plans to go public.

Secondly, citi She is not the only one the lender has approached for help with her current problem. According to a report by Wall Street Journal published Tuesday, Celsius also hired legal experts law firm restructuring Akin Gump Strauss Hauer & Feld LLP to advise you on possible solutions.

Celsius He has not provided details about these collaborations, nor has he advanced any plans for the platform since it abruptly paused withdrawals earlier this week. Instead, he said he would share information when appropriate and, in a tweet on Tuesday, he assured that he was “working 24 hours for our community“.

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Regulators don’t look away

Meanwhile, US watchdogs are keeping a close eye on the crypto lender after the withdrawal pause. according to another separate report of The BlockUS Securities and Exchange Commission (SEC) Chairman Gary Gensler made some comments suggesting the regulator is aware of the issues it faces Celsius.

Many of the cryptocurrency lending platforms actually own your asset in some joint omnibus account.Gensler said before a audience of Wall Street Journalthough without mentioning Celsius. “So you see things like this weekend and Monday, where there’s a crypto exchange, a crypto lending platform, that said ‘You can’t withdraw. Not now’“.

This is not the first time that the SEC chairman has spoken out about the risks of cryptocurrency platforms. Agencies have also been particularly sharp on crypto-asset services and products, seeing them as unregistered securities. Last year, the SEC stopped efforts to coinbase To trow lenda crypto lending product.

Also, other services such as BlockFi Y Nexus they have also faced scrutiny from US regulators. The first agreed to pay a fine of USD $100 million to the SEC and other local control agencies for non-compliance with the securities law. Nexus Y Celsiusmeanwhile, had already come under scrutiny by the New York Attorney General last year.

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News shakes the market even more

The liquidity drawbacks for Celsiuswhich billed itself as a native cryptocurrency bank with high-interest savings accounts and low-interest loans, come amid a battered market. Bitcoin has plunged to $20,000 levels as the global cryptocurrency market capitalization sees two-year gains erase gains.

In addition to the problems of Celsiusreputed cryptocurrency-focused hedge fund, is rumored to have Three Arrows Capital, also faces insolvency problems due to unexpected liquidations. The news, which comes on top of announcements of layoffs from various exchanges, is no doubt sparking new fears in a sector already rocked by price declines.

The reports also come a month after the historic implosion of landan issue that had already caught the attention of regulators and legislators, bringing them to the edge of their seats in the face of the need for stricter regulation of the sector.


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Article by Hannah Estefanía Pérez / DailyBitcoin

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WARNING: This is an informative article. DiarioBitcoin is a means of communication, it does not promote, endorse or recommend any investment in particular. It is worth noting that investments in crypto assets are not regulated in some countries. May not be suitable for retail investors as the full amount invested could be lost. Check the laws of your country before investing.

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