In the latest phase of Celsius Network’s protracted liquidity problem, which first became public when the lender blocked client withdrawals in June, the insolvent crypto lender has requested permission to liquidate its stablecoin assets from the U.S. Bankruptcy Court for the Southern District of New York.
According to court documents published yesterday, Celsius has requested permission to sell its stablecoins in order to fund operations. Previously, on Wednesday, the corporation said in a coin report that it owes more than $2 billion in various cryptocurrencies; its stablecoin assets amount to around $23 million, held in 11 distinct stablecoins.
If the application is allowed by Chief U.S. Bankruptcy Judge Martin Glenn, Celsius will be able to continue its everyday activities “without court or creditor scrutiny.”
Paying back its creditors (also known as customers) is a distinct, continuing legal procedure, but Celsius claims in its petition that it’s in everyone’s best interest for the company to monetize its stablecoin holdings so that it may continue operating without securing further funding.
Stablecoins, unlike Bitcoin, Ethereum, and other popular cryptocurrencies, have a set value since they are tethered to fiat currencies. As a result, they provide a reasonably dependable source of crypto liquidity.
The current Chapter 11 bankruptcy proceedings of Celsius are a prominent example of what analysts have termed a “crypto winter” or “liquidity crisis.”
Since the collapse of the Terra ecosystem in May, which occurred when Terra’s dollar-pegged UST stablecoin lost its peg, a number of prominent cryptocurrency enterprises have declared bankruptcy. First Celsius followed suit in June, then Voyager and Three Arrows Capital in July.
Celsius said in a court statement on September 1 that it was attempting to restore consumer monies. The business promised to release roughly $50 million in cryptocurrency belonging to consumers who were part of the “custody” scheme, which consisted of accounts that held cryptocurrency but did not earn profits.