Celsius - Exiting Bankruptcy
Celsius Network has been a rollercoaster ride in the world of cryptocurrency. Launched with a promising future and a promise of high returns, the platform met a dramatic end in 2022. Causing a huge uproar among many users with millions of funds frozen on the platform with little to no hope of recovery for a period. But after a lengthy stay in the bankruptcy court, fast forward into February 2024, there is finally some resolution. Celsius is finally exiting bankruptcy!
A Celsius Timeline: From Boom to Bust
In 2018, Celsius Network launched its platform offering good interest-bearing accounts for crypto holdings. The platform started gaining popularity, attracting the attention of crypto holders from around the globe. By 2021, the platform experienced explosive growth, attaining millions of users with its generous yields. The boom period made Celsius one of the biggest worthed crypto holding platforms but who could predict the calm before the chaos?
In July 2022, the cryptocurrency markets started taking a nosedive, and Celsius abruptly halted withdrawals from its holding accounts, citing “extreme market conditions”. As the funds started to become inaccessible, fear spread like wildfire among the users of the platform.
In the same month, facing financial difficulties, Celsius filed for Chapter 11 bankruptcy in the United States. The aim was to restructure its finances. The situation further escalated when the former CEO Alex Mashinsky stepped down from his position amidst the allegations of manipulating the platform’s CEL token price. Fast forward to today, he still maintains his innocence and is currently awaiting trial.
Emerging from Wreckage
Fast forward to February 2024, and finally, a glimmer of hope emerged for Celsius’s creditors. After nearly 18 months of legal battle, the court finally approved Celsius to exit bankruptcy. Creditors will be receiving over $3 Billion back from the company, but there is a crucial twist - the anticipated payout will not be in cryptocurrency. Instead, the receiving amounts will be a combination of:
Fiat Currency: It's a sigh of relief for many, but the return of amounts is not going to be in cryptocurrency, rather creditors will receive a portion of their funds in stable, government-backed currencies like the US dollar. This reflects the ongoing volatility in the world of cryptocurrency.
Stake in Ionic Digital: The creditors will also receive a stake in the newly formed Bitcoin mining company Ionic Digital. This is to return the amount of creditors via future profits but still, the inherent risks associated with the cryptocurrency market cannot be ignored.
The approval for this type of return was given by almost 98% of creditors for this plan. This significantly highlights that at least a portion of their funds is going to be recovered in reliable fiat currency.
A Stark Reminder
The Celsius saga is a stark reminder for crypto holders to not to put all their eggs in one basket. It is important to educate oneself before investing in any cryptocurrency or crypto-related products. As much as high-yield crypto lending platforms sound attractive, they all come with their inherent risks.
The future of Celsius fully returning to the market and the overall cryptocurrency market remains uncertain. But one thing is clear for Celsius creditors, the wait for retrieval of their money is finally over, even though not in the form they expected.