Celsius Network Wants to Sell $23M in Stablecoins as It Will Not Expose Celsius to Economic Risk
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Celsius Network, the bankrupt cryptocurrency lender, has asked the United States Bankruptcy Court for the Southern District of New York for permission to sell $23 million in stablecoin holdings to generate more liquidity to support its business operations. This is the latest development in Celsius’s ongoing liquidity crisis, which first came to light in June when the lender froze customer withdrawals. Three Celsius companies hold eleven separate stablecoins worth nearly $23 million. The funds, however, were used to support the company’s crypto lending services.
According to court documents filed yesterday, Celsius has requested permission to sell its stablecoins to raise funds to support its business operations. The bankruptcy petition will be heard in bankruptcy court on October 6.
$23 Million Stablecoin Stockpile
The company claimed to own more than ten stablecoins worth approximately $23 million. As we all know, the company is undergoing a chapter 11 hearing in the United States Bankruptcy Court for the Southern District of New York. Before the company declared bankruptcy, Celsius provided institutional and retail loan services using stablecoins. Celsius has been issued an interim cash management order, which prohibits the company from selling any of its crypto assets without the judge’s permission. Celsius anticipates that by selling its stablecoins, it will be able to raise some of the funds needed to fund its operations.
A Judge Chose an Independent Examiner for Celsius Network
The United Trustee’s Office requested that a neutral examiner be appointed to confirm Celsius’s business claims. However, the cryptocurrency lender’s credibility was quickly eroded as creditors reported that Celsius and its CEO Alex Mashinsky had changed false information about the firm’s liquidity before declaring bankruptcy. On September 14, bankruptcy judge Martin Gleen approved hiring an unbiased examiner to investigate matters relating to Celsius cryptocurrency holdings, tax payments, and changes to account offerings.
The plan for making a comeback with “Kelvin” is as follows:
With the assistance of Project Kelvin, Celsius hopes to emerge from its difficult situation much stronger. According to Mashinsky, Celsius will resume operations once clients have been reimbursed properly. The new custody service will only be used to store cryptocurrency. Customers will have to pay to use the custody service. However, the Committee of Unsecured Creditors did not support the goals of “Project Kelvin.” It was suggested that the corporation focuses on ensuring that the ongoing reorganization process is open to all account holders and beneficial.
Celsius Network is not Transparent; US Trustee Office
In August, William K. Harrington, who represents Region 2 for the Office of the U.S. Trustee, submitted a motion seeking the appointment of an independent examiner in the Celsius case. The Trustee’s office decided the step was required after stating the Celsius leadership was not forthright about the company’s financial state.
When given the green light, the examiner will have a week to submit a cost estimate and schedule of operations. After the additional week for budget approval by the court, the examiner will have two months to present their findings.