A key moment for the bankrupt crypto network.
In July 2022, the cryptocurrency lending network Celsius Network filed for bankruptcy, entering Chapter 11 bankruptcy protection in the United States. This move followed the liquidity crisis triggered by the crypto market crash, forcing the company to freeze withdrawals.
Recently, Celsius announced its intention to release its Ethereum (ETH) assets to facilitate the distribution of assets to its creditors. This major unstaking operation is expected to take place in the coming days. The ETH holdings played a crucial role for Celsius, providing income through staking rewards, which helped the company cover the costs incurred during its restructuring process.
Potential impacts on the price of Ether
The decision by Celsius to unstake its ETH holdings could ease selling pressure on Ether. Indeed, the process of selling staking rewards on the open market to cover expenses related to the reorganization plan could contribute to a negative perception of the token. However, some market participants express concerns that this unlocking could lead to a massive sell-off of ether, while others see it as a positive long-term impact for the ether market.
According to data from the analytics tool Arkham, crypto wallets linked to Celsius had staked more than 151 million dollars in Ether, likely generating annual performance of 4 to 5%. In addition, recent data shows that Celsius transferred more than 30,000 ETH to the custodian Fireblocks over the past week, a portion of which was deposited onto the Coinbase exchange, where it was likely swapped for stablecoins.
Reaction and future outlook
Celsius has opened its vault to eligible users, allowing them to withdraw 72.5% of their crypto assets until February 28. Approximately 58,300 users held 210 million dollars in custody assets, according to a court filing last September.
Furthermore, Alex Mashinsky, the founder and former CEO of Celsius, currently free on bail following fraud charges, will face trial in September.
In conclusion, this move by Celsius is seen as good news for customers waiting to recover their funds for at least 18 months. Under the recovery plan, Celsius has arranged to distribute Bitcoin (BTC) or ETH to its creditors. At present, about a third of the ETH in the withdrawal queue belongs to Celsius, representing a total of 206,300 ETH, valued at approximately 468.5 million dollars.
