Celsius (CEL) Pops 16% Despite Negative Action From Government Agency
KEY POINTS
- Centralized crypto banking outfit Celsius (CEL) made headlines over the past few weeks when it blocked investors from withdrawing funds and then filed for Chapter 11 bankruptcy to restructure itself and its debt.
- Celsius got more bad news yesterday when it got slapped with a legal filing from California's DFPI state agency alleging the firm illegally sold unregistered digital securities.
- When Celsius filed for bankruptcy protection, the price of CEL cratered more than 55% to a low of $0.4239 per token, according to CoinMarketCap.
- Ironically, over the past month the CEL token has pumped 110% -- and 16% over the past 24 hours -- to a price of $1.85 at the time of writing. Investors seem to believe this crypto is undervalued at a 77% discount from its all-time high of $8.02 last June.
On Monday, California's Department of Financial Protection and Innovation (DFPI) filed an order alleging that bankrupt Celsius illegally sold securities.
Sometimes negative news has unexpectedly positive effects on the value of a specific asset. The latest example of that involves a legal filing from California's Department of Financial Protection and Innovation (DFPI) yesterday, asserting that crypto lender Celsius offered unregistered digital securities to investors. Usually that type of legal action spells trouble for an asset.
However, according to CoinMarketCap at press time, the Celsius token is up 16% after that news and it has soared 110% over the past month to a price of $1.85 since filing for Chapter 11 bankruptcy to protect it from legal claims and debtors.
Additionally, its 24-hour trading volume has shot up 115% to $22.8 million, signaling that investors believe the crypto is undervalued and has potential upside despite its legal challenges. Celsius' all-time high was $8.02 last June, while its current price point represents a 77% discount from that peak.
The CEL token is different from the Celsius trading network
It's important to note that the CEL token is still available for trading on various cryptocurrency exchanges for speculative investors. However, clients who invested funds using the Celsius exchange to earn interest in other digital assets cannot access those funds because Celsius froze those accounts in late June. That controversial move to restrict access to investments sparked outrage among the 1.7 million users blocked from their accounts. While Celsius subsequently paid off hundreds of millions in debt and converted some of its liquid assets to wrapped Bitcoin to shore up its financials, it wasn't enough to stop the bankruptcy filings.
The Chapter 11 filing triggered regulatory investigations from state agencies in Vermont, Washington, Texas, and New Jersey -- with the California DFPI piling on as well. Bankruptcy protection typically does not end well for investors in the organization, but investors in the CEL token are betting that Celsius will successfully emerge from bankruptcy.
That's both good news and bad news for various investors, and it should serve as a cautionary warning for everyone interested in crypto assets to thoroughly understand and research where they put their money. Right now, there is way too much uncertainty and legal bluster for the average investor to comfortably buy into the Celsius token.
Our Research Expert
Tor Constantino is a corporate communications executive and business writer with an MBA. Since 2017, he has written about cryptocurrencies, blockchain, and crypto's potential to revolutionize finance. His writing has appeared in outlets including Entrepreneur, Forbes, Fortune, CEOWorld, and Yahoo!.
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