Celsius Network, the cryptocurrency lending platform that filed for bankruptcy protection in the summer of 2022, announced its intention to unlock its Ethereum (ETH) holdings to facilitate the distribution of assets to creditors and ensure liquidity. This unlocking, scheduled for the next few days, represents a significant step in the company’s restructuring process after freezing withdrawals due to a liquidity crisis caused by declining crypto market conditions.
The unlocking involves withdrawing ETH that the company had staked, generating income to offset costs during the reorganization process. Celsius Network filed for Chapter 11 bankruptcy protection in July 2022, facing a liquidity crisis due to crypto market volatility, resulting in the temporary suspension of withdrawals.
In preparation of any asset distributions, Celsius has started the process of recalling and rebalancing assets to ensure ample liquidity
— Celsius (@CelsiusNetwork) January 4, 2024
Following the approval of its settlement plan, Celsius allowed qualified users to withdraw 72.5% of their cryptocurrencies until February 28. According to court documents from last September, around 58,300 users held $210 million in custody assets, highlighting the importance of an orderly distribution of assets to meet creditor demands.
Celsius Could Trigger a Drop in Ethereum Price
This unlocking, occurring at a time when the market speculates on potential implications, could have a short-term impact on the price of Ethereum. Some market participants express concerns about a possible “dump” of ETH, which could negatively affect its value.
The founder and former CEO of Celsius Network, Alex Mashinsky, who faces fraud charges and was arrested, is currently out on bail and scheduled to face a jury trial on September 17.
This strategic move by the lending platform follows its previous announcement of focusing on Bitcoin mining as part of its post-bankruptcy strategy, a shift that attracted attention and scrutiny from the crypto community. As the company progresses in its restructuring process, the community and investors closely observe how these developments will influence the company’s position in the market.
