Bankrupt crypto lending company Celsius has requested the court for authorization to sell its stablecoin holdings. The sale of the stablecoins will generate liquidity to finance the crypto lender’s daily operations but won’t be used to repay creditors.
Celsius Plans To Sell Its Stablecoin Holdings
In the latest chapter of Celsius’s bankruptcy proceedings, the company asked the United States Bankruptcy Court for the Southern District of New York for permission to sell its stablecoin stash.
In the Sept. 15 filing, Celsius said the move is necessary to pay for its operations. Although the sale proceeds represent the property of the Debtor’s estate, Celsius Network will not be paying back creditors as that is part of a separate and ongoing legal process.
“The Debtors, however, continue to own stablecoins that should be monetized to fund their operations in these Chapter 11 cases given their market stability compared to other types of cryptocurrencies,” an excerpt of the filing reads.
Celsius’ legal team from Kirkland & Ellis law firm had previously filed a notice of coin report, revealing that its stablecoin cache amounts to roughly $23 million held in eleven different stablecoins.
A hearing has been set for October 6 by the Southern District of New York’s Bankruptcy Court to discuss the matter and either approve or deny the motion. If presiding Judge Martin Glenn authorizes it, the crypto lender will have enough liquidity to carry out its operations “without court or creditor oversight”.
What Happened To Celsius?
Once one of the crypto sector’s leading lending companies, Celsius’ financial troubles started after the Terra ecosystem tokens UST and LUNA implosion. The company froze withdrawals for customers in June, alluding to “extreme market conditions”. Celsius initiated bankruptcy proceedings a month later, revealing that it owed $5.5 billion to creditors and customers.
In the fallout from Celsius’ collapse, the company has encountered a string of controversies, with CEO Alex Mashinsky at the centre of the drama. Some reports claimed that Mashinsky had been trading cryptocurrencies with customer funds against the advice of seasoned traders at the company.
Vermont state officials also suggested that the beleaguered New Jersey-based firm had been manipulating the price of its native CEL token at the expense of traders since 2019.
Early this month, Celsius filed a motion to unfreeze some — but not all — of its customers’ accounts. The company sought to release $50 million in digital assets in its Custody Program and Withhold Accounts.
Judge Martin Glenn on Wednesday signed off on a request for the U.S. Trustee’s office to appoint an independent examiner to help shed light on several issues regarding the Celsius fiasco. The examiner will look into Celsius’ digital assets, tax payment procedures, the current status of its mining business, and the changes to its account offerings.
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