Adam Levitin, professor of law at Georgetown University, has said that the bankruptcy of financially distressed crypto lending platform Celsius is likely inevitable.
Celsius suspended withdrawals, exchanges, and transfers between accounts “due to extreme market conditions” last June 13. However, analysts suggested the real reason for what happened is a “liquidity crisis,” due to which the company cannot make payments to customers.
Analysts have previously noted that the Celsius team is strengthening its debt position in three main areas. In the Maker DAO, by increasing the amount of collateral, the platform brought the vault liquidation price to $14,000 per wBTC. Celsius has also increased the ETH collateral of its stETH tokenized assets in the Aave protocol and paid off a debt of 2.4 million USDC.
Adam has noted the leadership of Celsius has decided to bet on the “adventure with the resurrection.” The lawyer has said this is a standard practice for insolvent companies.