Celsius Crypto Lender Initiates Repayments, Transfers Over $125 Million Worth of Ether

Celsius has transferred more than $125 million worth of Ether to multiple cryptocurrency exchanges as part of a plan to repay its creditors.

Celsius now focuses on crypto mining.

By Ruholamin Haqshanas Last updated: January 16, 2024

Embattled crypto lender Celsius has taken a major step towards repaying its creditors by transferring over $125 million worth of Ether to various cryptocurrency exchanges. The move is part of Celsius’s ongoing efforts to address its financial situation and fulfill its commitment to distributing assets to those who have been waiting patiently.

According to data sourced from Arkham Intelligence, $95.5 million of Ethereum was shifted to Coinbase, while $29.7 million found its way to FalconX between January 8th and January 12th. These sizable transfers demonstrate Celsius’s determination to meet its obligations and provide relief to its creditors. However, despite the transfer, Celsius still holds a substantial stash of over 550,000 ETH, amounting to an astonishing $1.36 billion at the time of this report.

The decision to reduce its Ether holdings follows Celsius’s earlier move to unstake 206,300 ETH valued at $407 million. This freed-up Ethereum will be used to cover expenses related to the restructuring process and prepare for creditor repayments. Celsius has committed to distributing Bitcoin and Ethereum to its creditors, although a specific date for the disbursement of these funds has yet to be announced.

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For more than 18 months, Celsius’s creditors have been eagerly awaiting the release of their funds, which have been tied up in the platform since the firm’s initial declaration of bankruptcy in July 2022. This recent development is a positive sign that Celsius is actively working towards resolving its financial situation and honoring its commitments.

Q&A: What else do readers need to know?

Q: How will Celsius determine the distribution of funds to creditors?
A: Celsius has not provided specific details on how funds will be distributed to creditors. It is likely that the distribution will be based on the amount owed to each creditor and the assets available for distribution.

Q: Can creditors expect to receive their funds soon?
A: While Celsius has made progress in transferring assets, a concrete date for creditor repayments has not been announced. Creditors will have to wait for further updates from Celsius regarding the timeline for fund distribution.

Q: What impact will these repayments have on Celsius’s financial standing?
A: The repayments will help improve Celsius’s financial standing by reducing its outstanding liabilities. However, it is important to note that Celsius still holds a significant amount of ETH, which underscores the potential for future growth and stability.

FTX and Alameda Research Join the Repayment Efforts

Celsius is not the only distressed cryptocurrency firm taking significant steps to address its financial situation. On January 14th, the bankrupt crypto exchange FTX and its defunct trading arm, Alameda Research, executed their own transfers, sending $28 million worth of cryptocurrency to various exchanges.

FTX and Alameda Research transferred $18.7 million in Wrapped Bitcoin, $8 million in Ethereum, and $1 million in Pendle (PENDLE) tokens to Coinbase and Binance. These transfers are part of their comprehensive efforts to secure funds for creditor repayment.

Administrators overseeing FTX’s bankruptcy proceedings have successfully recovered approximately $7 billion in assets, including a substantial $3.4 billion in cryptocurrency. The positive market response to FTX creditor claims has led to some claims trading as high as $0.50 on the dollar in October 2023.

Although a specific repayment date for FTX customers has not been announced, the current plan estimates that repayments will commence sometime in 2024. This progress showcases FTX’s commitment to resolving its financial obligations and rebuilding trust with its stakeholders.

Q&A: Let’s address some reader concerns

Q: How will FTX determine the repayment amounts for its creditors?
A: The repayment amounts for FTX creditors will likely be determined based on the claims filed by individuals and the available assets. Creditors with higher claims may receive a larger percentage of their funds compared to those with smaller claims.

Q: What is the outlook for FTX’s creditor repayments?
A: While specific details about repayment timelines are not available, the fact that FTX has successfully recovered a significant amount of assets is an encouraging sign. Creditors can expect to receive a proportionate amount of their funds as per the bankruptcy proceedings.

Q: What effect will the crypto transfers have on FTX’s ability to repay creditors?
A: The transfers made by FTX and Alameda Research demonstrate their commitment to securing funds for creditor repayment. By utilizing their digital asset holdings, they are actively working towards meeting their obligations. These transfers are a positive indication of their ability to provide timely repayments.

Celsius Diversifies with Crypto Mining

In addition to the repayments, Celsius has recently shifted its focus to crypto mining. Judge Martin Glenn granted Celsius permission to proceed with a previously approved alternative plan, which involves the creation of a public company dedicated solely to Bitcoin mining.

Under this arrangement, creditors will receive a portion of their recovery through shares in the upcoming Bitcoin mining company. This innovative approach enables creditors to benefit from the potential success and growth of the mining operations.

The plan also unlocks $225 million in crypto assets that were initially intended for financing new ventures but were rejected by the Securities and Exchange Commission (SEC). The newly formed entity, called MiningCo, will be operated by Hut 8 under a four-year mining management contract.

MiningCo will be responsible for managing five mining locations in Texas, with a combined computing capacity of approximately 12 EH/s (equivalent to 122,000 miners) and over 300 MW of power. This initiative allows Celsius to diversify its business and leverage the potential of crypto mining.

Q&A: Addressing reader’s burning questions

Q: How will the creation of MiningCo benefit Celsius and its creditors?
A: The creation of MiningCo provides an opportunity for Celsius to generate additional revenue through crypto mining. By involving creditors in this endeavor, they will have a chance to benefit from the potential success and profitability of the mining operations.

Q: What is the significance of unlocking the rejected crypto assets?
A: Unlocking the rejected crypto assets represents an alternative avenue for Celsius to utilize these assets. Instead of being idle, they can now be utilized for mining activities, potentially generating income and enhancing the recovery process for the creditors.

Q: Is diversifying into crypto mining a sound strategy for Celsius?
A: Diversification can be a prudent strategy for any business, including those in the crypto industry. By expanding into crypto mining, Celsius can tap into additional revenue streams and leverage the potential of this growing sector. However, it’s important to note the associated risks and volatility that come with mining operations.

For more information on cryptocurrency news and industry trends, check out the following links:

1. Celsius Unstake $470 Million Ethereum Ahead of Repayments
2. Judge Approves $225M MiningCo Transaction, Celsius Expands
3. FTX’s Bankruptcy Journey and Creditor Claims
4. Latest Updates from Arkham Intelligence
5. Overview of Hut 8’s Mining Capabilities

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