A key moment for the bankrupt crypto network
In July 2022, cryptocurrency lending network Celsius Network filed for bankruptcy, entering Chapter 11 bankruptcy protection in the US. The move followed the liquidity crisis caused by the fall in the cryptocurrency market, forcing the company to freeze withdrawals.
Recently, Celsius announced its intention to release its assets in Ethereum (ETH) to facilitate the distribution of assets to its creditors. This major release is expected to take place in the next few days. ETH holdings played a crucial role for Celsius, providing income via staking rewards, which helped the company cover costs incurred during its restructuring process.
Potential impact on Ether price
Celsius’ decision to unstake its ETH holdings could ease selling pressure on Ether. Indeed, the process of selling staking rewards on the open market to cover the costs associated with the reorganisation plan could have contributed to a negative perception of the token. However, some market participants have expressed concerns that this unblocking 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 analytics tool Arkham, crypto wallets linked to Celsius had stashed more than $151 million in ether, likely generating annual returns of 4-5%. In addition, recent data shows that Celsius transferred more than 30,000 ETH to custodian Fireblocks over the past week, some of which was deposited on exchange Coinbase, where it would likely have been exchanged for stablecoins.
Reaction and future prospects
Celsius has opened its vault to qualified users, allowing them to withdraw 72.5% of their crypto assets until 28 February. Around 58,300 users held $210 million in custody assets, according to a court filing from last September.
In addition, Alex Mashinsky, the founder and former CEO of Celsius, currently on bail following fraud charges, will face trial in September.
In conclusion, this move by Celsius is seen as good news for customers who have been waiting to recover their funds for at least 18 months. Under the recovery plan, Celsius plans to distribute Bitcoin (BTC) or ETH to its creditors. Currently, approximately one-third of the ETH in the withdrawal queue belongs to Celsius, representing a total of 206,300 ETH, valued at approximately $468.5 million.
