Embattled crypto lending platform Celsius Network is not on the brink of a bailout, according to a Wall Street Journal report citing people familiar with the matter.
Caisse de dépôt et placement du Québec, a major Canadian pension fund, and the New York-based WestCap Group led Celsius’ oversubscribed $750 million Series B funding round last year, which raised the firm’s valuation to $3.5 billion.
However, neither of them is reportedly willing to provide additional funds to Celsius, which earlier this week halted withdrawals from its platform.
“Few are feeling OK about things,” one person with knowledge of the negotiations between Celsius and its investors told the WSJ.
Commenting on the earlier investments into Celsius, that person said that “there was more risk in this than fully appreciated.”
Celsius announced a $400 million Series B funding round in October last year amid intense scrutiny placed on crypto lending firms from local regulators, with another $350 million injected in the firm in November.
At the time, investors didn’t appear to be too concerned with the attention that crypto lending firms were receiving from the regulators.
“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,” Laurence Tosi, the founder of WestCap, said last October.
Investors weigh up options
Things are reportedly looking different now though, as investors are willing to either stand back, or let another company try to buy Celsius, according to a different person close to the discussions. Another possible option on the table is to simply let the business restructure; earlier this week, Celsius reportedly hired restructuring attorneys from the law firm Akin Gump Strauss Hauer & Feld LLP.
In a blog post on Sunday, Celsius said it was pausing all withdrawals, swaps and transfers between accounts, citing “extreme market conditions.”
Rival company Nexo was quick to react to the news, coming forward with a bid to acquire Celsius’ “certain remaining qualifying assets.”
Up to now, neither Nexo or Celsius have provided additional comments on the matter, aside from Alex Mashinsky, the CEO of Celsius, taking to Twitter on Wednesday to state that his team is working “non stop” on the issue and to ask customers for patience.
The same day, Reuters reported that securities regulators in five states have opened investigations into Celsius’ decision to freeze withdrawals.
Want to be a crypto expert? Get the best of Decrypt straight to your inbox.
Get the biggest crypto news stories + weekly roundups and more!
Source: https://decrypt.co/103146/few-are-feeling-ok-celsius-investors-unlikely-to-fund-bailout-report
