Celsius investors won’t fund the platform’s bailout as they are not expected to back the lending company with more funds so let’s read more today in our latest cryptocurrency news.
The troubled crypto lending platform Celsius Network is not getting bailed out according to reports that we are reading today. The Major Canadian pension fund Caisse de depot et placement du Quebec and New York-based WestCap Group previously led the oversubscribed $750 million Series B funding round for Celsius last year which helped the company reach a valuation of $3.5 billion.
Neither of them is willing to provide additional funds to Celsius which halted withdrawals earlier this week. The Celsius investors however are not feeling great about the idea of backing the platform up. Commenting on the previous investments into Celsius, a person said that there was more risk in this than it was initially appreciated. Celsius annoucned a $400 million Series B funding round in October 2021, amid heavy scrutiny placed on the lending companies from regulators with another $350 million injected into the company back in November.
The investors didn’t seem to be concerned at that time with the attention these companies were getting from regulators. The founder of WestCap Laurence Tosi added:
“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.”
Things are looking much different now as investors are willing to stand back or simply allow another company to try and buy Celsius. Another option on the table is to allow the business to restructure as Celsus already hired a restructuring attorney from the law company Akin Gump Strauss Hauer & Feld LLP. In a blog post, the company said it will pause all withdrawals, transfers, and swaps between accounts due to extreme market conditions. Rival company Nexo reacted to the news whcih came with a bid to acquire certain remaining qualifying assets. Up to this time, neither Celsius nor Nexo provided more comments on the matter aside from the CEO of the platform Alex Mashinsky stating that his team is working to fix the issue and asking customers for patience.
At the same time, Reuters reported that the securities regulators in five states opened investigations into celsius after their decision to freeze withdrawals.
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