Celsius Settles Two-Thirds of Debt Owed to Creditors Amid Bankruptcy Proceedings

Celsius, a cryptocurrency lending and borrowing platform, has repaid approximately $2.53 billion to around 251,000 creditors, which is two-thirds of its eligible customers as of Monday.

It gained significant attention in the past owing to its financial turmoils, which led to its bankruptcy in 2022.

A court ruling on Monday revealed the amount of funds being distributed to creditors, which is approximately 84% of the $3 billion worth of assets owed by Celsius to its 375,000 creditors.

Celsius was founded in 2017 by Alex Mashinsky and Daniel Leon. Within months of its operation, it quickly rose to prominence, allowing users to deposit their cryptocurrencies, earn interest on their holdings, and take out loans using crypto as their collateral. The platform gained popularity for offering higher yield interest rates compared to traditional banks and other crypto platforms.

As a platform, Celsius relied heavily on leveraging user deposits to invest in various decentralized finance (DeFi) protocols. However, the crypto market downturn in 2022, highlighted by events such as the LUNA collapse and declining crypto asset prices, severely impacted the platform’s liquidity.

These events ultimately led to Celsius’s bankruptcy, leaving its users shocked. It announced pausing all withdrawals, swaps, and transfers between accounts, citing “extreme market conditions” as the reason.

The assets of hundreds of thousands of users were frozen soon after, leading to widespread panic across the ecosystem. The bankruptcy procedure had also been quite lengthy for Celsius, hugely affecting its stakeholders like customers, creditors, and regulators.

Returning funds to customers seemed to be a major challenge until today.

Celsius isn’t the first exchange to undergo financial turmoils. Recently, Mt. Gox, a leading global crypto exchange, also made the news for similar reasons. It filed for bankruptcy in 2014 after a massive hack. Last week, the defunct exchange transferred around 13,265 Bitcoin, valued at $784 million, which was its first major on-chain activity since July.

Even though Celsius has repaid two-thirds of its eligible customers, the future still seems hazy, and a lot of uncertainty remains regarding the remaining customer funds. With the unfolding of bankruptcy proceedings, the affected parties continue to look forward to further updates on how the remaining assets will be returned and what effect this will have on the broader crypto space.

Gairika holds positions in BTC. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

Post Views: 206