According to the technology website CTechCelsius Network laid off 150 workers in an attempt to stay operational.
The troubled loan and lending platform announced a pause in withdrawals on June 13, citing “extreme market conditions.” In the weeks leading up to the announcement, rumors circulated that the company was insolvent, a claim denied by CEO Alex Mashinsky at the time.
Since then, it has emerged that a major factor in the company’s downfall was a lack of proper risk management. Commenting on Celsius problems, Campbell Harveyfinance professor at Duke University, said:
“Come on, given the volatility of this space, you need to do some basic stress testing.”
Similarly, beleaguered crypto investment platform Three Arrows Capital (3AC) filed for Chapter 15 bankruptcy on July 1. Many wonder if it’s a matter of time before Celsius does the same.
Open helpline for users to get in touch
Celsius users were left in limbo after the announcement to pause withdrawals three weeks ago.
Since then, with the threat of bankruptcy looming, the company has kept quiet, leading to further frustration from users.
On June 30, Celsius He broke the silence by posting a blog update saying he was working to “stabilize liquidity and operations.” He went on to refer to taking steps to “preserve and protect assets” and exploring options such as “strategic transactions” and restructurings.
“We are focused and working as fast as we can to stabilize liquidity and operations.”
The blog post also advertised a helpline number and messaging service for users to get in touch.
The previous communication was in June 20thwhen the company said it was working with regulators and authorities.
Is Celsius defending himself?
Despite Celsius’s spotty and vague communication, his actions suggest that management intends to save the company.
Although Celsius does not provide official figures for its workforce, its LinkedIn page gives a range between 501 and 1,000 employees. According to the business information research platform, Owl, Celsius has 850 employees. If so, the layoffs represent an 18% reduction in the number of employees.
Also the Twitter account @BTCKYLE reported that Celsius paid Aave back $50 million on July 3, improving the loan health ratio and freeing up a significant portion of customer funds.
*Update 1/3/22* (BIG payment ✅)
Celsius has paid another $50 million for the Aave loan!
The new loan health ratio ~ 2.76
— ₿TCKYLE (@BTCKYLE) July 3, 2022
The CEL token surged 43% on July 3 before hitting resistance at $1.03, leading to a daily close of $0.90. At time of writing, CEL is trading down 0.4% from the previous day’s closing price.