The firm has petitioned to continue to operate. It isn’t requesting authority to allow customer withdrawals right now, saying that claims would be handled through the Chapter 11 process.
Loading
Bankruptcy processes can take a while to resolve. Creditors of Mt Gox, at one time the world’s biggest Bitcoin exchange that closed doors in 2014 and began liquidation proceedings, have yet to be paid.
Whether Celsius’s users will get anything is unclear. Under its terms of service, treatment of its customers’ digital assets in case of insolvency is “unsettled” and “not guaranteed,” which may result in customers being treated as unsecured creditors.
When the Terra stablecoin and related Luna token collapsed in May, Celsius scrambled to pull its funds out of Terra’s Anchor Protocol, which offered 20 per cent returns on Terra deposits. More recently, it suffered as another large holding – a token known as staked ETH, “or stETH”, which is tied to the value of Ether – became largely illiquid and more widely discounted to Ether.
In the past month, Celsius paid back all – more than $US900 million – of its debt in decentralised applications Aave, Compound and MakerDAO, according to blockchain data and tracker Zapper. The paydowns have raised the spectre of a legal debate on how and in what order should distressed crypto companies pay back creditors – whether they are actual people or platforms governed by computer code referred to as smart contracts.
Bloomberg
Stay connected with us on social media platform for instant update click here to join our Twitter, & Facebook
We are now on Telegram. Click here to join our channel (@TechiUpdate) and stay updated with the latest Technology headlines.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.