Celsius Applies to Sell $23M Stablecoin to Maintain Daily Operations

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2022-09-18 12:38 (UTC+8)

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Hope to pay day-to-day operating expenses and will not be used to repay creditors.

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Hope to pay day-to-day operating expenses and will not be used to repay creditors.

This article comes fromDecrypt, original author: Tim Hakki

Odaily Translator |

This article comes from

, original author: Tim Hakki

Odaily Translator |

In June this year, the encrypted lending platform Celsius encountered a liquidity crisis and suspended customer withdrawals. Now Celsius has applied to the U.S. Bankruptcy Court for the Southern District of New York to sell its stablecoins.

If the motion is approved by Chief U.S. Bankruptcy Judge Martin Glenn, Celsius will have sufficient liquidity to continue its day-to-day operations "without the oversight of the courts or creditors."

Repaying creditors (i.e. customers) is a separate ongoing legal process, but Celsius’ filing says it’s in everyone’s interest for Celsius to liquidate its stablecoin holdings so it can continue operating without needing to secure additional financing.

Unlike Bitcoin, Ethereum, and other popular cryptocurrencies, stablecoins have a fixed value because they are pegged to fiat currencies, thus forming a relatively reliable source of liquidity in the crypto space.

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Celsius Liquidity Crisis

Celsius, which is undergoing Chapter 11 bankruptcy proceedings in the United States, is a high-profile case that commentators have dubbed a “crypto winter” or a “liquidity crisis.”

Several high-profile crypto firms have filed for bankruptcy since the de-pegging of the dollar-pegged stablecoin TerraUSD (UST) in May and the collapse of the Terra ecosystem. First came Celsius, which filed for bankruptcy in June, followed by Voyager and Three Arrows Capital in July.

On Sept. 1, Celsius said in a court filing that it was seeking to return some of its client funds. Celsius asked the court to allow it to reopen withdrawals for escrow clients, involving nearly $50 million in cryptocurrency.

If Celsius's proposal is approved, the returned funds will only cover a small portion of its debt. Celsius has about 58,300 users with a total of $210.02 million in deposits through its custody and withholding, with 15,680 of those customers holding about $44 million worth of "pure custody assets," the documents show. However, it remains unclear when clients who invested $4.3 billion in assets in Celsius' popular "Earn" program accounts will get their money back.