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- 1 The bankrupt crypto lender, Celsius Network, announced its plan to unstake Ethereum holdings to repay its creditors.
- 2 Terra LUNA crash and FTX’s unprecedented demise are the reasons behind Celsius Network’s bankruptcy.
- 3 The court handling the crypto lenders’ case has approved its request to restructure the company.
On January 05, 2023, Celsius Network posted on X that it is planning to unstake its existing Ethereum holdings to process asset distribution to its creditors.
Before its bankruptcy, Celsius Network was known for its service in the sector. Analysts believe that the Terra crash and FTX collapse are the primary reasons behind crypto lenders’ demise.
In the same X thread, the company added that the crucial event of unstaking will occur in the upcoming month. The thread details how staked ETHs helped the company as an income source to offset costs incurred during its restructuring process.
Celsius Network has opened portals for eligible users to withdraw their 72.5% of crypto held until February 28. Related documents state that 58,300 users are facing the issue of funds in their wallets and accounts; the amount is nearly $210 Million.
However, the founder and chief executive officer of Celsius Network was earlier detained on fraud charges. He is currently out on bail.
Nansen data suggests that Celsius Network has 206,300 ETH worth $466 Million as of writing.
Celsius Network Bankruptcy Explained
Celsius Network is a cryptocurrency lending company that declared Chapter 11 bankruptcy in July 2022.
Celsius Network has filed for bankruptcy in the United States Bankruptcy Court for the Southern District of New York. This is the same court that heard the Three Arrows Capital’s bankruptcy.
Chapter 11 Bankruptcy, commonly known as Reorganisation Bankruptcy, follows the same procedure. It is a complex yet successful operation. This bankruptcy procedure allows the firm to continue operations while undergoing financial reorganization.
After declaring bankruptcy, Celsius Network announced a $1.2 Billion debt, while a study on Celsius Network alleges that the actual debt is over $2.85 Billion. The substantial gap between the initial sum and the amount indicated during the bankruptcy petition implies that the company misled the authorities.
According to Celsius Network’s bankruptcy papers, they had total liabilities of $5.5 Billion and assets of $4.3 Billion. This demonstrates a difference of $1.2 Billion, the corporation’s declared deficit.
Celsius Network has gained clearance from a U.S. bankruptcy court for a reorganization plan that would restore Bitcoin to users and establish a new firm controlled by Celsius creditors. U.S. Bankruptcy Judge Martin Glenn in Manhattan approved the reorganization orders.
According to court documents filed in the early hours of May 25, the Fahrenheit consortium, which includes blockchain venture capital company Arrington Capital, had acquired Celsius Network’s institutional loan portfolio, staked cryptocurrency, mining unit, and other alternative assets.
Reuters stated on May 25, 2023, that all Celsius account holders will possess 100% of NewCo’s new stock. It is also noted that the firm would be managed by a newly formed board of directors nominated by the creditors.
Steefan George is a crypto and blockchain enthusiast, with a remarkable grasp on market and technology. Having a graduate degree in computer science and an MBA in BFSI, he is an excellent technology writer at The Coin Republic. He is passionate about getting a billion of the human population onto Web3. His principle is to write like “explaining to a 6-year old”, so that a layman can learn the potential of, and get benefitted from this revolutionary technology.
