Here’s Why Celsius Network Users Might Never Get Repaid Post Bankruptcy Filing
Celsius, a crypto lender, halted its operations without prior notice on June 14 and has now filed Chapter 11 bankruptcy with the US Bankruptcy court.
The insolvent firm currently has $167 million worth of hard cash assisting its operations at the time of restructuring.
After the company stopped its operations, the users hoped for some returns. However, it appears that hope is about to be crushed as the company’s terms and conditions claim that its customers may not get back their deposits.
According to the terms and conditions, the digital assets will not be returned if the company goes bankrupt or liquidates. The terms of service claim that any Acceptable Digital Assets utilized to gain profit or as security within the Borrow Program might not always be redeemed if Celsius files for bankruptcy, goes into liquidation, or is incapable of settling its debts.
However, Celsius is still answerable to its creditors. As per the bankruptcy filing, Celsius and its subordinates have 50 creditors, and the last creditors account for $5,588.694.
Other creditors include Pharos USD Fund SP Pharos Fund SP, Sam Bankman-Fried’s owned Alameda Research, and B2C2 Ltd, among others.
On the other hand, the firm plans for restructuring wherein the stakeholders could see some returns, but Celsius has no plans to restart its withdrawals.
Coinbase Acquires Celsius’s stETH Holdings
Following the bankruptcy news, Celsius’s native currency, the CEL token, has dropped from $0.95 to as low as $0.45 in a day. Currently, CEL is trading at $0.66 with a drop of 9.16% in the last 24hrs.
The Blockchain data company, Zapper, asserts that $1 billion DeFi loans associated with Maker, Aave and others have been settled by Celsius. In addition, while the firm’s Staked Ethereum (stETH) were transferred to Coinbase Custody, Ryan, Coinbase Custody’s CEO, claims that they acquired stETH at a discount.
As said, users will be regarded as unsecured lenders in the case of insolvency and will have little to no chance of succeeding in litigation against Celsius.