Home Business Bankrupt crypto lender Celsius wants to sell its $23 million stablecoin holdings

Bankrupt crypto lender Celsius wants to sell its $23 million stablecoin holdings

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Bankrupt crypto lender Celsius wants to sell its $23 million stablecoin holdings

In the latest chapter in Celsius’ ongoing liquidity crisis, which first became public when the lender frozen customer withdrawals in June, the bankrupt crypto lender filed in the U.S. Bankruptcy Court for the Southern District of New York for permission to sell its stablecoin assets.

To research deposits from yesterday indicate that Celsius has requested permission to sell its stablecoins in order to pay for the operations. The company previously released a parts report Wednesday revealing he had over $2 billion in debt from various cryptocurrencies; its stablecoin holdings are approximately $23 million, held in 11 different stablecoins.

If the petition is approved by Judge Martin Glenn, the U.S. Chief Bankruptcy Judge, Celsius will have cash to continue its day-to-day operations “without court or creditor oversight.”

Reimbursing its creditors (i.e. customers) is a separate ongoing legal process, but Celsius’s filing argues that it is in everyone’s interest for Celsius to monetize its stablecoin holdings in order to sue. its operations without having to obtain additional funding.

Contrary to Bitcoin, Ethereumand other leading cryptocurrencies, stablecoins have a fixed value, as they are pegged to fiat currencies, and thus are a relatively reliable source of crypto liquidity.

Celsius’ liquidity crisis

Celsius’ ongoing Chapter 11 bankruptcy proceedings are a high-profile case of what commentators have called a “crypto winter” or “liquidity crunch.”

Since the collapse of the Terra ecosystem in May, which occurred when Terra’s dollar-pegged UST stablecoin lost his ankle, several high profile crypto companies have filed for bankruptcy. The first was Celsius in June, then in July, Traveler and Capital of the Three Arrows followed suit.

On September 1, Celsius said in a filing in court that he was trying to come back certain client funds. The company offered to unlock nearly $50 million in crypto belonging to customers who were part of the “custody” program — accounts that stored crypto but did not generate returns.

If Celsius’ proposal were approved, the returned funds would only cover a fraction of the lender’s obligations: the deposit accounts account for $210.02 million in crypto, according to the filing. However, for clients who invested in crypto in Celsius’ popular “earn” program account for $4.3 billion in assets, it was unclear when they would get their money back.

Exactly one week later, a US bankruptcy court deposit revealed that Vermont state officials had requested broader powers to investigate Celsius, alleging the insolvent cryptocurrency exchange had artificially inflated the price of its CEL token at the expense of retail investors over the past three years.

“By increasing its net position in CEL by hundreds of millions of dollars, Celsius has increased and supported the market price of CEL, thereby artificially inflating the company’s CEL holdings in its balance sheet and financial statements,” said Ethan McLaughlin. , Deputy General Counsel of Vermont.

On Wednesday, Judge Martin Glenn appointed an independent reviewer to oversee the Celsius bankruptcy case. The examiner will examine Celsius’ crypto holdings, the utility obligations of its crypto mining business, recent changes to its account offerings, as well as its compliance with tax and bankruptcy proceedings.

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