Celsius introduces "HODL" mode to prevent bankruptcy liquidation, believing users will support the platform.

According to sources familiar with the matter, the legal team of Celsius advised seeking bankruptcy protection. However, the company's executives believed that users actually have a deep love for Celsius, so they chose to introduce the "HODL" mode, allowing users to voluntarily support Celsius by suspending withdrawals, while also avoiding bankruptcy and other crises.

HODL Mode

According to an announcement by Celsius:

HODL Mode is a "safe" feature that, when enabled, allows users to restrict certain platform functions. Users can choose when to activate HODL Mode, making it an ideal feature for those who do not intend to transfer or withdraw assets in the long term.

Once HODL Mode is activated, the following functions are disabled:

• Withdrawals are not allowed
• Transfers via CelPay are not possible
• Whitelisting withdrawal addresses cannot be changed
• After disabling HODL Mode, the above functions will take 24 hours to be restored

Why is HODL Mode needed?

Since June 13, Celsius has suspended withdrawals, effectively preventing users from withdrawing funds. So why is HODL Mode needed? Insiders suggest that it helps demonstrate emotional support from users to Celsius to lawyers.

It is also noted that even with withdrawals disabled, Celsius still receives sporadic user deposits.

Celsius believes that avoiding bankruptcy can bring more value to users, giving them time to address liquidity crises.

Assuming Celsius Declares Bankruptcy

Chapter 11 of U.S. bankruptcy law allows companies to continue operating while repaying debts after declaring bankruptcy. If Celsius enters bankruptcy proceedings, user assets will be sold at market prices, with users becoming creditors of Celsius. Celsius will propose a restructuring plan subject to creditor approval and oversight by lawyers.

However, the bankruptcy liquidation process is lengthy and arduous. The famous hacked exchange Mt. Gox, which declared bankruptcy in 2014, took nearly eight years to finalize the repayment plan.

As of now, Celsius founder Alex Mashinsky has been mostly absent from public view since June 16, except for a Twitter post thanking the community. Insiders indicate that part of the reason is due to legal advice to refrain from making any public statements.