Cryptocurrency lender Celsius is trying to overcome the hypothermia caused by the crypto winter and position itself again as a reliable service on the market, gaining its credibility once again. And to achieve this goal, it’s turning to legal experts.

According to the Wall Street Journal, Celsius hired the law firm Kirkland & Ellis LLP to advise them on its restructuring process and ease the financial burden that spiraled out of control following the collapse of Terra, the de-pegging of Lido’s stETH token, and the general slump of the crypto market.

Restructuring is a court-approved plan in which a company reorganizes to pay its creditors within its means. Parcel payments, board changes, merger and acquisition processes, transfers of rights, and other solutions may be considered.

Understanding the Crisis

Kirkland & Ellis LLP is replacing Gump Strauss Hauer & Feld LLP, a law firm hired by Celsius to advise them after they halted operations as a measure to avoid a liquidity crisis.

Celsius’ business model was based on lending cryptocurrencies and offering high-interest rates to those who provided liquidity by committing their funds. A good part of its business proposition was closely linked to Lido. On this platform, users can join in ETH staking without providing the 32ETH required to be a proper Ethereum validator.

On Lido, users put up some ETH, and in return, they receive a token called stETH. Once Ethereum transitioned to Proof of Stake, each stETH could be redeemed 1:1 for ETH as each validator on the new Ethereum blockchain receives ETH in return. Right now, it is not possible to unlock the funds staked on the ETH2.0 staking contract.

Celsius had large amounts of stETH in its coffers. Still, after a panic episode and a delay in the ETH2.0 launch announcement, stETH lost its parity and began selling at a discount. So much was the gap that the lack of liquidity due to massive redemptions led Celsius to pause withdrawals. This, in turn, tanked the price of its own token.

.@CelsiusNetwork is pausing all withdrawals, Swap, and transfers between accounts. Acting in the interest of our community is our top priority. Our operations continue and we will continue to share information with the community. More here: https://t.co/CvjORUICs2

— Celsius (@CelsiusNetwork) June 13, 2022

From there, it has been a rollercoaster ride for the company —one that ended up in a restructuring process as it attempts to meet its financial obligations.

Celsius Refuses to Die

Celsius has started to recover, showing signs that it wants to survive the cryptocurrency winter and not suffer the fatal fate of other giants like Three Arrows Capital or Voyager Digital.

Despite the losses, Celsius has begun to reduce its risk, paying off many of its debts and implementing some strategies to increase its resource management efficiency.

As Cryptopotato reported earlier this month, Celsius laid off 150 employees in non-strategic areas. Other crypto businesses that have laid off part of their staff are Coinbase, Crypto.com, Blockfi, Huobi, and Gemini, just to cite a few examples.

In addition, Celsius started paying off its debts, especially to Maker. It started by paying $120 million and made another series of payments until it cleared its debt, claiming almost 22K wBTC in return. These funds were subsequently sent to FTX, which sparked rumors of a possible sell-off to pay off the rest of its debts, causing a price dump.