Celsius' Lawyers Want To File Chapter 11 But DeFi Firm Asks Clients To HODL

DeFi lending firm Celsius is unwilling to surrender to its current economic position as lawyers hired by the firm are advocating for Chapter 11 bankruptcy, a form of bankruptcy that involves a reorganization of a debtor’s business affairs, debts, and assets.

According to TheBlock, which talked to people close to the DeFi lending firm, Celsius executives believe that the client of the firm would prefer it to avoid "lengthy and painful" bankruptcy proceedings.

Although the firm did not issue any official statement, Celsius executives want or rather need clients to show their support by engaging "HODL Mode" in their Celsius account, sources told TheBlock.

"HODL Mode is a security feature that gives you the ability to temporarily disable outgoing transactions from your Celsius account. You control when HODL Mode is activated and it is an ideal feature for those that do not plan on withdrawing or transferring funds from their account for an extended period of time," Celsius describes in a blog post.

Celsius paused withdrawals on June 12 due to liquidity issues, causing widespread panic in the crypto market. It seems that the firm is on the verge of bankruptcy and is looking to regain its composure.

Interestingly, TheBlock was also the first to reveal that Celsius is in talks with Wall Street giant Citigroup while The Wall Street Journal said that the firm is working with Akin Gump Strauss Hauer & Feld lawyers and restructuring-focused management consultants from Alvarez & Marsal.

On the other hand, the people close to the firm also stated that users continue to deposit their funds into Celsius despite the withdrawal halt.