Bankrupt cryptocurrency lender Celsius Network files request to sell its stablecoin assets, as it seeks funds to continue operations
Celsius Network continues to explore ways to generate funds during its Chapter 11 (bankruptcy) proceedings in the United States.
Reuters reported that on Thursday, Celsius filed a request for the sale of its stablecoin holdings, in a bid to generate liquidity in order to fund its operations.
The New Jersey-based company reportedly intends to sell its current and any future stablecoins it may receive, as needed, to fund its Chapter 11 cases, according to a court document.
The request was filed with the United States Bankruptcy Court Southern District Of New York and a hearing is scheduled on 6 October to discuss the proposed sale, the document showed.
According to Reuters, Celsius currently owns 11 different forms of stablecoin, for a total of about $23 million.
Shortly after Vermont’s financial regulator warned in July that Celsius was “deeply insolvent”, the cryptocurrency lender initiated voluntary Chapter 11 proceedings at the US Bankruptcy Court for Southern District of New York.
Chapter 11 came after Celsius Network in June froze all withdrawals, swaps, and transfers between customer accounts, citing “extreme” conditions.
Celsius said at the time of its Chapter 11 declaration that it had $167 million in cash on hand.
But it had more than 100,000 creditors and owed around $4.7 billion, according to its bankruptcy filing.
Celsius had been one of the biggest crypto lending platforms with a market value (before Chapter 11) of $12bn.
At its peak in October 2021, the crypto lender reportedly had $25 billion in assets under management.
The firm allowed users to lend out their tokens as collateral for other crypto projects in exchange for annual yields of up to 17 percent.
But troubles began after investor interest in such high-risk areas dropped off following the collapse of the TerraUSD “stablecoin” in early May, which along with the Luna coin, was linked to a similar high-yield scheme.
Celsius’ business model, like that of Terra, in which it was an investor, depended upon a steady flow of new entrants feeding the system, or borrowing to pay the high rates.
But some critics likened this business model to a pyramid scheme.
US crypto lender Voyager Digital also filed for bankruptcy in July.
In early August Celsius Network announced it was seeking to hire the services of its former chief financial officer (CFO) Rod Bolger to help it during its Chapter 11 proceedings in the United States.
Eyebrows were raised when Celsius said in a filing wanted to pay Bolger about $92,000 a month, prorated over a period of at least six weeks.
Some Celsius investors filed objections, and days later Celsius withdrew its motion to bring back Rod Bolger, who had only been at Celsius since February this year.