Bankrupt crypto lender Celsius wants to sell its $23M stablecoin holdings
Bankruptcy Crypto Lender Celsius
Modified Date:- Published Date:-Categories: Cryptocurrency
Bankrupt cryptolender Celsius wants to sell its $23M stablecoin holdings
In thelatest chapter of Celsius's ongoing liquidity crisis, which first wentpublic when the lender halted customer withdrawals in June, the bankrupt cryptolender sought permission from the US Bankruptcy Court for the SouthernDistrict of New York to sell its stablecoin holdings. Court filings fromyesterday indicate that Celsius has asked for authorization to sell its stablecoinsto pay for operations.
The companypreviously released a coin report on Wednesday revealing that it has over $2billion in liabilities from various cryptocurrencies; its stablecoinholdings amount to approximately $23 million, held in 11 different stablecoins.
Should theproposal be approved by the chief US bankruptcy judge, Judge MartinGlenn, Celsius would have the liquidity to continue with his daily operations "withoutcourt or creditor oversight." Paying back its creditors (akacustomers) is a separate ongoing legal process, but Celsius' filing argues thatmonetizing its stablecoin holdings in order for Celsius to continueoperating without securing additional financing is up to everyone.
Unlike Bitcoin,Ethereum, and other leading cryptocurrencies, stablecoins have afixed value, since they’re pegged to fiat currencies, and thus form arelatively reliable source of liquidity in crypto.
TheCelsius liquidity crisis
Celsius'ongoing Chapter 11 bankruptcy proceedings are a high-profile case thatcommentators have called a "crypto winter" or "liquiditycrisis". Since the collapse of the Terra ecosystem in May, whichoccurred when Terra's dollar-pegged UST stablecoin lost its peg, severalhigh-profile crypto companies have filed for bankruptcy. First it was Celsiusin June, then in July, Voyager and Three Arrows Capital followed suit.OnSeptember 1, Celsius said in a court filing that it was seeking to return someof its customers’ funds. The company offered to release nearly $50 million incrypto belonging to customers who were a part of the “custody” program—accountsthat stored crypto but did not generate returns.
Exactly aweek later, a U.S. Bankruptcy Court filing revealed that Vermont stateofficials have asked for broader powers to investigate Celsius, alleging thatthe insolvent cryptocurrency exchange had artificially inflated the price ofits CEL token at the expense of retail investors for the last three years.
Vermont officials have asked for broader powers to investigate Celsius, an insolvent cryptocurrency exchange that had artificially inflated the price of its CEL token at the expense of retail investors.