Celsius Network’s Journey Through Bankruptcy Ends with $3 Billion Creditor Payout

ByGavin Cole

Feb 1, 2024

After navigating the complexities of an 18-month bankruptcy process, Celsius Network, once a prominent player in the cryptocurrency lending space, has accomplished the significant milestone of distributing over $3 billion in assets to its creditors.

This achievement marks the culmination of a challenging journey involving intricate restructuring efforts, close coordination with regulatory bodies, and the adoption of innovative solutions, including alternative settlement agreements and the conversion of less liquid altcoins into major cryptocurrencies like Bitcoin and Ethereum.

Unanimous Support and Strategic Moves Mark Celsius’s Path to Recovery

Celsius Network’s path to financial recovery reached a significant milestone with the near-unanimous approval of its distribution plan, garnering 98% support from account holders awaiting funds.

This plan, integral to the restructuring process, facilitated the transfer of over $3 billion in assets to creditors through a mix of cryptocurrencies and fiat currencies, providing much-needed closure to those affected by the company’s previous uncertainties.

The bankruptcy proceedings gave birth to Ionic Digital, a new venture focused on Bitcoin mining. This entity, with ownership stakes distributed among the creditors, has partnered with Hut 8, a Canadian firm, for operational management, signaling a fresh start in the industry.

To ensure the swift execution of this plan, Celsius took decisive steps by liquidating a significant portion of its Ethereum holdings. According to Spot on Chain, a blockchain analytics provider, approximately 67,500 ETH tokens, worth around $157 million, were moved to Coinbase’s institutional trading arm, marking a key move in the company’s efforts to streamline the distribution process to its creditors.

Celsius’s Strategic Liquidation and Regulatory Compliance

Lookonchain, a notable on-chain tracking platform, has revealed that Celsius Network executed a significant transaction, transferring 18,000 ETH tokens to Coinbase. Given the current market prices of Ethereum, this move equated to a substantial $40 million shift in cryptocurrency assets.

This transaction is part of a broader strategy by Celsius, which has seen over 847,600 ETH tokens, valued at close to $2 billion, moved to centralized trading platforms such as Coinbase.

This concerted effort to liquidate large volumes of Ether and other cryptocurrencies is designed to facilitate a more efficient payout process for creditors, who have been waiting to recuperate their investments following the company’s financial struggles.

Throughout this process, Celsius maintained rigorous cooperation with both federal and state regulatory authorities, ensuring that every aspect of their distribution plan complied with the highest standards of legal and financial regulations.

With the distributions now complete and the company beginning the process of winding down its operations, Celsius is set to conclude its challenging chapter, marking the end of a complex multi-year ordeal.

Prioritizing Creditors in Celsius’ Resolution Strategy

In reflecting on the recent developments, Chris Ferraro, the Plan Administrator and former Chief Restructuring Officer at Celsius, emphasized the company’s commitment to its creditors.

Throughout the bankruptcy proceedings, the focus has been on ensuring that the creditors’ interests were at the forefront, aiming to maximize both the value recovered and the speed of the process.

As the company moves forward, it has announced the permanent closure of its once-pioneering mobile app and website, key components of its unique business model.

Although the creditors may not receive the full amounts they were owed, the meticulous management of the bankruptcy process has resulted in a majority of them being satisfied with the outcome. This resolution is particularly significant considering the challenging situation that unfolded when withdrawals were suddenly stopped in June 2022.

This chapter in Celsius’ history not only marks an end to its complex journey but also serves as a valuable lesson for the cryptocurrency industry at large. The insights gained from this experience are instrumental in guiding the sector toward regaining trust among its stakeholders and building a stronger, more resilient ecosystem for the future.

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