{"id":62992,"date":"2022-06-16T12:48:36","date_gmt":"2022-06-16T09:48:36","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=62992"},"modified":"2025-09-05T21:21:45","modified_gmt":"2025-09-05T18:21:45","slug":"law-professor-says-celsius-bankruptcy-is-almost-inevitable","status":"publish","type":"post","link":"https:\/\/u1f987.com\/en\/law-professor-says-celsius-bankruptcy-is-almost-inevitable\/","title":{"rendered":"Law professor says Celsius bankruptcy is almost inevitable"},"content":{"rendered":"<p>The bankruptcy of the crypto-lending platform Celsius, which has fallen on hard times, is likely inevitable. This view was voiced by Georgetown University law professor Adam Levitin.<\/p>\n<blockquote class=\"twitter-tweet\" data-lang=\"en\">\n<p dir=\"ltr\" lang=\"en\">Here\u2019s what\u2019s going to happen with Celsius\u2019s customers in a Celsius bankruptcy. (I\u2019ll explain later why it\u2019s very likely to end up there.) 2\/<\/p>\n<p>\u2014 Adam Levitin (@AdamLevitin) <a href=\"https:\/\/twitter.com\/AdamLevitin\/status\/1536932981687853061?ref_src=twsrc%5Etfw\">June 15, 2022<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>On June 13 Celsius <a href=\"https:\/\/u1f987.com\/en\/news\/celsius-token-plunges-50-amid-withdrawal-suspension\">suspended withdrawals<\/a>, trading and transfers between accounts due to extreme market conditions.<\/p>\n<p>Analysts, however, suggested that the real reason for the events was a liquidity crisis, due to which the company cannot make payouts to customers.<\/p>\n<p>Earlier analysts noted that Celsius <a href=\"https:\/\/u1f987.com\/en\/news\/celsius-network-token-price-rises-nearly-59\">is bolstering its debt positions<\/a> in three main areas. In MakerDAO, by increasing the collateral, the platform pushed the vault\u2019s liquidation price to $14,000 per wBTC. Celsius also increased the ETH collateral of its stETH tokenized assets in the Aave protocol and repaid a debt of $2.4 million USDC.<\/p>\n<p>Levitin noted that Celsius\u2019s management decided to place a bet on a \u201cgamble on resurrection.\u201d The lawyer called this standard practice among insolvent companies.<\/p>\n<blockquote class=\"twitter-tweet\" data-conversation=\"none\" data-lang=\"en\">\n<p dir=\"ltr\" lang=\"en\">Now Celsius seems to have decided to \u201cgamble on resurrection\u201d (standard insolvent company play). Instead of just closing out its Maker DAO position by repaying the loan, Celsius instead topped up more collateral. 25\/<\/p>\n<p>\u2014 Adam Levitin (@AdamLevitin) <a href=\"https:\/\/twitter.com\/AdamLevitin\/status\/1536935645901365248?ref_src=twsrc%5Etfw\">June 15, 2022<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>According to Levitin, repaying the loan in MakerDAO for Celsius was more expensive than increasing collateral.<\/p>\n<p>He believes that sooner or later the platform\u2019s management will have to decide to sell liquid assets to reimburse users\u2019 funds. The bankruptcy, which the lawyer called nearly inevitable, would allow that process to be orderly and set the stage for subsequent litigation.<\/p>\n<p>At the same time, almost all Celsius customers are expected to become unsecured creditors of the platform, Levitin says. This means that payouts to them will come from funds remaining after the secured loans are repaid, and after all administrative costs are covered.<\/p>\n<p>The Wall Street Journal reported on June 15 that Celsius hired lawyers from Akin Gump Strauss Hauer &#038; Feld <a href=\"https:\/\/u1f987.com\/en\/news\/celsius-network-token-price-rises-nearly-59\">for possible financial restructuring<\/a>.<\/p>\n<p>Journalists noted that the platform\u2019s initial goal is to attract capital from investors.<\/p>\n<p>According to The Block, to solve this task the company <a href=\"https:\/\/u1f987.com\/en\/news\/media-celsius-hires-citigroup-to-explore-financing-options\">turned to the financial conglomerate Citigroup<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The bankruptcy of the crypto-lending platform Celsius, which has fallen on hard times, is likely inevitable. This view was voiced by Georgetown University law professor Adam Levitin.<\/p>\n","protected":false},"author":1,"featured_media":62993,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[1348,1138],"class_list":["post-62992","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-celsius-network","tag-opinions"],"aioseo_notices":[],"amp_enabled":true,"views":"25","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/62992","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/comments?post=62992"}],"version-history":[{"count":1,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/62992\/revisions"}],"predecessor-version":[{"id":62994,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/62992\/revisions\/62994"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media\/62993"}],"wp:attachment":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media?parent=62992"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/categories?post=62992"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/tags?post=62992"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}