In a significant development for the beleaguered cryptocurrency lending platform, Celsius has confirmed the commencement of the process to recall and rebalance its crypto assets, primarily Ether (ETH).
This move is part of the platform’s ongoing efforts to prepare for the timely distribution of assets to creditors. The announcement comes after Celsius filed for Chapter 11 bankruptcy in July 2022 and has since been navigating its restructuring journey.
Asset shifting for enhanced liquidity
Celsius has embarked on the task of shifting its assets to ensure a sufficient level of liquidity as it readies itself for the forthcoming asset distributions. Notably, the lending firm will also unstake its existing Ether holdings, which have generated valuable staking rewards income.
The freed-up Ether will serve multiple purposes, including offsetting specific costs incurred during the restructuring process and facilitating timely distributions to creditors.
This strategic maneuver is particularly welcome news for Celsius customers who have patiently waited over 18 months to reclaim their funds. According to the recovery plan outlined by Celsius, creditors are slated to receive either Bitcoin (BTC) or Ethereum (ETH).
Blockchain analytics firm Nansen has reported a noteworthy revelation about Celsius and its pending withdrawals. A staggering portion of the ETH within the withdrawal queue belongs to Celsius, approximately 206,300 ETH, valued at roughly $468.5 million at current market prices. Additionally, Nansen’s data indicates that 19,906 validators are awaiting a complete exit, while Celsius has already withdrawn 40,249 ETH to date.
While concerns have been voiced regarding the potential impact of Celsius’s asset recalls on the Ethereum market, some observers view this development as a positive move in the long run. One commentator expressed optimism, stating that removing Celsius from the equation would alleviate significant pressure on ETH, allowing for a redistribution of remaining assets.
Celsius’s turbulent journey
Celsius finds itself among a group of cryptocurrency lending platforms that faced bankruptcy during the tumultuous period of crypto market disruptions in 2022. The company’s Chapter 11 filing in July of that year marked a pivotal moment in its history.
In November 2023, Celsius revealed a scaled-back post-bankruptcy strategy, pivoting its focus toward Bitcoin mining. However, this strategic shift was met with dissatisfaction from the presiding judge overseeing the bankruptcy proceedings, who expressed displeasure at the abrupt change in direction.
As Celsius embarks on its asset recall and rebalance journey, it stands at a critical juncture in its mission to satisfy creditors and chart a path forward in the ever-evolving landscape of the cryptocurrency industry.
