Celsius Network’s own lawyers are recommending the crypto loan company to declare bankruptcy.
As reported by the Block, lawyers hired by Celsius have encouraged it to file for Chapter 11 bankruptcy but the company is instead seeking support from its users to battle against the recommendation.
Chapter 11 allows the company to operate whilst it resolves its debt issues. Client positions will be sold into US dollars at the current market price. Celsius believes that its clients will receive more value if it avoids bankruptcy by buying the firm more time to clear trades stuck in illiquid positions.
Read more: Below 0° Celsius: When Your Deposit Gets Frozen
Executives at Celsius believe retail clients would rather the firm avoid bankruptcy and are urging users to show their support by engaging “HODL Mode” in their Celsius accounts.
“HODL Mode is a security feature that gives you the ability to temporarily disable outgoing transactions from your Celsius account,” the Celsius website reads. “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.”
Under HODL mode, users are not able to withdraw funds, send funds via CelPay and change whitelisted withdrawal addresses. However, since 12 June 2022, Celsius has frozen withdrawals following the LUNA fallout.
Read more: Wash Trading, Losses: Celsius Network Has Bigger Problems Than LUNA
Nonetheless, Celsius insists that HODL mode will show that users still support the firm, adding that it is still receiving client deposits despite its withdrawal freeze.