The lending firm Celsius has been making significant moves to repay its creditors in recent weeks. With its bankruptcy court proceedings and Chapter 11 filing in the background, Celsius has been actively transferring funds to crypto exchanges. This article will explore the latest developments and initiatives taken by Celsius to fulfill its obligations.
In the past week alone, Celsius transferred over $125 million worth of Ether to crypto exchanges. A total of $95.5 million was moved to Coinbase, while $29.7 million was sent to FalconX. These transfers are part of Celsius’ overarching plan to repay its creditors and ensure the availability of sufficient liquidity for potential asset distributions. Despite these transfers, Celsius still holds more than 550,000 ETH, equivalent to approximately $1.36 billion.
Parallel Initiatives
Celsius is not the only organization involved in transferring funds to centralized exchanges as part of debt repayment. FTX and Alameda Research, two ventures associated with Sam Bankman-Fried, have also engaged in similar processes. Combined, these ventures transferred $28.2 million in digital assets, which included Wrapped Bitcoin, Ether, Pendle, and People. FTX and Alameda still retain approximately $1.2 billion in assets on the Ethereum Virtual Machine.
Clawback Initiative
In a bold move, Celsius has proposed a clawback initiative targeting users who cashed out over $100,000 in the 90 days leading up to the bankruptcy declaration. Represented by Kirkland & Ellis, Celsius expects these users to resolve their outstanding liability or face litigation. Celsius views these pre-bankruptcy withdrawals as avoidance actions, eligible for pursuit in court. The notice specifies that affected creditors must return 27.5% of their withdrawn amount by January 31, 2024, to avoid potential clawback.
Celsius intends to use the funds recovered through its clawback initiative to repay creditors in accordance with the restructuring agreement. By doing so, Celsius aims to ensure that users with trapped assets can receive their due share. This repayment plan is crucial for the financial stability and credibility of the lending firm. The success of this unique initiative remains uncertain, but if it proves effective, it could serve as a precedent for other struggling platforms seeking similar fund recovery methods.
Celsius’ ongoing efforts to repay its creditors demonstrate its commitment to resolving its bankruptcy proceedings diligently. Through the transfer of funds to crypto exchanges and the implementation of the clawback initiative, Celsius aims to restore liquidity and repay its obligations. The outcome of these efforts remains to be seen, but they have the potential to shape future strategies for debt repayment in the crypto industry.