New restructuring plans off Celsius

Celsius files new restructuring plans that shock the crypto lender’s former clients. Former financiers could be cheated of a large part of their investment. The sale of 15 cryptocurrencies is also planned for regulatory reasons.

Celsius plans to sell customer funds

Insolvent crypto lender Celsius plans to sell remaining customer funds. In the summer of 2022, the New York company went bankrupt. The bear market was blamed, but risky trading may also have played a role.

In a new application to the responsible bankruptcy court, Celsius is asking to allow the sale of 15 cryptocurrencies. These are customer funds that were paid into the Earn Program and were intended to generate passive income for their original owners.

Celsius then wants to invest the money won in Bitcoin and Ethereum. The reason for the swap is regulatory ambiguity in the United States. In order to avoid possible conflicts, possibly problematic coins should be turned into the two market leaders.

The affected coins together have a combined value of $215 million based on current market prices. 70 million of them fall on Celsius’ own token CEL.

However, the calculated market value of this token is higher than the market capitalization of the currency. This is because the tokens held in Celsius custody are not counted as “locked coins”. Due to the discrepancy between the two values, it is not possible to sell the entire quantity at the current market value.

Large cryptocurrencies such as Polygon, Cardano, Chainlink and Litecoin are also affected by the sales. These four billion-dollar projects will probably remain unimpressed by the exchange, which is scheduled to begin on July 1st.

Users who only held their funds with Celsius and did not participate in the Earn Program will not be affected by the sale. These systems remain in their original form.

New restructuring plans shock customers

The new restructuring plans shock customers. Many users on Twitter are very critical of Celsius’ ideas. But it’s not just the ongoing desire to regain access to one’s investments that’s to blame.

Rather, it is also about a new plan to pay off creditors with so-called set-offs . Many creditors suspect that this plan results in only a fraction of the monies owed being repaid.

However, in order for it to be carried out at all, it would first have to be approved by the competent New York bankruptcy court. According to lawyer David Adler, it is questionable whether this will happen.

“This proposed ‘treatment’ violates all consumer protection laws (state and federal) and the group of borrowers will oppose this plan.” So eagle.

At the same time, Adler announced legal action against the implementation of the idea in a tweet. On Twitter, many users now assume that they will only get back up to 25 percent of the money they initially lent should the court confirm the plan.

Celsius promised investors a return of up to 17 percent per year on investments. For a long time it was unclear whether there would be a repayment at all. In May, Fahrenheit LLC acquired Celsius.

Fahrenheit wants to make several hundred million dollars in profits from an estimated total value of two billion dollars and feed the bankruptcy estate into a new company called NewCo.

According to the current status, this should primarily be dedicated to Bitcoin mining. Celsius once acquired its own mining equipment, which is now idle.