Celsius Seeks to Survive Liquidation When BTC Hits $15,100

The Celsius Network has reportedly retained Citigroup to assist with its restructuring as the company stares down prospective bankruptcy.

The company has retained Citigroup in an “advisory capacity,” a source told The Block. However, the source added, “It’s not like Citi is going to give Celsius money out of their balance sheet.”

Restructuring is a way to renegotiate debts without declaring bankruptcy. Celsius froze its customers’ funds on Sunday, citing “extreme market conditions,” and has refused to comment on whether it is using those funds in an effort to avoid liquidation on a loan.

As of Monday, the company held a $278 million loan on the Maker Protocol backed by $420 million in collateral, which faced a margin call if bitcoin hit a price of $18,300. Through a combination of repayments and collateral enhancements, Celsius managed to lower that price to $15,100 as of Wednesday.

Bitcoin briefly touched $20,100 early Wednesday morning before spiking to an intraday high of $22,800. Analysts widely expect it to continue on a downward trajectory through the end of the year. Big liquidation targets, like the one offered by Celsius, generally serve as a tantalizing target for market makers who stand to profit if prices move in the appropriate direction.

Celsius, a London-based exchange and lending service, claims on its website that it serves 1.7 million retail customers worldwide. It also owns a mining subsidiary, Celsius Mining. The company filed a plan to take that operation public in May.

It’s the second time in a month that Celsius has faced a financial crisis. Its problems began in May, when the value of Terraform’s UST stablecoin collapsed more than 99 percent. Celsius deposited at least $535 million in Ethereum in Terraform’s Anchor Protocol in the five months preceding that collapse. The value of that Ethereum had fallen to an estimated $463 million after Celsius frantically withdrew from the protocol.

“Celsius Network is working as quickly as possible and will share information as and when it becomes appropriate,” the company wrote on Twitter on Tuesday. “Acting in the interest of our community remains our top priority.

Celsius did not respond to a request for comment.