Celsius (CEL) jumps 16% despite negative government agency action

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On Monday, the California Department of Financial Protection and Innovation (DFPI) filed an order alleging that the bankrupt Celsius illegally sold securities.

Key points

  • Centralized crypto-banking company Celsius (CEL) made headlines in recent weeks when it blocked investors from withdrawing funds, then filed for Chapter 11 bankruptcy to restructure itself and restructure its debt.
  • Celsius received more bad news yesterday when it was slapped with a legal filing from California state agency DFPI alleging the company illegally sold unregistered digital titles.
  • When Celsius filed for bankruptcy protection, the price of CEL fell over 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 that this crypto is undervalued at a 77% discount from its all-time high of $8.02 last June.

Sometimes negative news has unexpected positive effects on the value of a specific asset. The latest example relates to a legal filing by the California Department of Financial Protection and Innovation (DFPI) yesterday claiming that crypto lender Celsius was offering unregistered digital securities to investors. Usually, this type of legal action creates problems for an asset.

However, according to CoinMarketCap at press time, the Celsius token rose 16% after this news and it has climbed 110% in the past month to a price of $1.85 since the chapter filed for bankruptcy. 11 to protect it from legal claims and debtors.

Additionally, its 24-hour trading volume rose 115% to $22.8 million, signaling that investors believe the crypto is undervalued and has upside potential despite its legal challenges. Celsius’ all-time high was $8.02 last June, while its current price represents a 77% reduction from that high.

The CEL token is different from the Celsius trading network

It is important to note that the CEL token is still available for trading on various cryptocurrency exchanges for speculative investors. However, customers who invested funds using the Celsius exchange to earn interest on other digital assets cannot access those funds because Celsius froze those accounts at the end of June. This controversial decision to restrict access to investments sparked outrage from the 1.7 million users locked out of their accounts. Although Celsius later paid off hundreds of millions in debt and converted some of its liquid assets into wrapped Bitcoin to shore up its finances, that was not enough to stop the bankruptcy filings.

The Chapter 11 filing has triggered regulatory investigations from state agencies in Vermont, Washington, Texas and New Jersey — with California’s DFPI as well. Bankruptcy protection usually does not end well for investors in the organization, but investors in the CEL token are betting that Celsius will successfully emerge from bankruptcy.

This is both good and bad news for various investors, and it should serve as a warning to anyone interested in crypto assets to fully understand and research where they are putting their money. Right now, there is far too much uncertainty and legal bluster for the average investor to comfortably buy the Celsius token.

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