CEO Of Crypto Company Celsius Resigns Amid Bankruptcy Process

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CEO Of Crypto Company Celsius Resigns Amid Bankruptcy Process. Celsius Network CEO Alex Mashinsky submitted his resignation letter on Tuesday, September 27, 2022, months after his crypto company filed for Chapter 11 bankruptcy protection.

Mashinsky’s resignation was effective immediately, but he said in a release he would continue to help the company deliver the “best possible outcome” to creditors.

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“I regret my continuing role as CEO has become an increasing nuisance, and I am deeply sorry about the difficult financial circumstances members of our community face,” he wrote in a release. .

He added that he had worked tirelessly to help the company and its advisors come up with a viable plan for the Company to return the coins to creditors in the most fair and efficient manner.

After the announcement was made, the company’s cryptocurrency, the CEL token, fell more than 7 percent in value, according to data from Coinmarketcap.

As of May, Celsius was one of the biggest players in the crypto lending space with more than USD 8 billion in loans to clients and nearly USD 12 billion in assets under management.

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The company will lend customers’ crypto to partners who are willing to pay sky-high interest rates to borrow them, and Celsius will then share a portion of that revenue with users.

The structure collapsed during the industry-wide liquidity crisis, which resulted in Celsius halting withdrawals in June. The market crash also caused other companies to freeze assets and at least three to file for bankruptcy.

Previously, bankrupt crypto lending company Celsius Network appeared to be considering a plan to convert its debts into “IOU” crypto tokens. IOU itself is an abbreviation of I Owe You or means I Owe You.

Celsius filed for Chapter 11 bankruptcy protection in July, a month after halting the drawdown due to a liquidity crunch caused by extreme market conditions.

Subsequent bankruptcy proceedings in the Southern District of New York have revealed the depth of Celsius’ financial troubles: The lender owes 500,000 creditors or nearly $5 billion.

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Even if Celsius sells all of its assets including its mining subsidiary, Celsius Mining will still have a debt of USD 1.2 billion.

CEO Of Crypto Company Celsius Resigns Amid Bankruptcy Process. Instead, a leaked audio recording of Celsius’s internal meeting shared by Celsius subscriber and YouTuber Tiffany Fong shows Celsius is considering alternative methods of paying customers with IOU crypto tokens.

Customers can later exchange “IOU tokens”, trade them on the open market or hold them to speculate on the potential long-term recovery of Celsius.

This was previously done by the operator of a liquidity-strapped Chinese mining pool, Poolin, suspending withdrawals from its wallet service earlier this month.

A week later, it was announced they would issue IOU tokens to affected customers representing a 1 to 1 ratio of users’ balances across six cryptocurrencies.

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The plan also bears some resemblance to Bitfinex’s recovery plan after the hack that drained 120,000 bitcoins (BTC) from the exchange’s reserves in mid-2016.

The exchange issues debt tokens to customers affected by the hack, which are then traded on the open market. As of April 2017, Bitfinex has bought back all remaining debt tokens.

Previously, crypto lending company Celsius Network, which is currently in Chapter 11 bankruptcy proceedings, has asked the court to sell its holdings of the stablecoin. Celsius did this as a way to generate liquidity to help fund its operations, according to a new court filing.

Celsius filed for bankruptcy in July, and is currently before the US Bankruptcy Court. for the Southern District of New York, which also handled the bankruptcy case of another crypto company, Three Arrows Capital.

If this motion is approved by Chief Justice Martin Glenn, the chief US bankruptcy judge, the sale proceeds will be used primarily to pay for Celsius Network’s operations.

While the proceeds generated from the sale of stablecoins are property of the debtor’s estate, paying them back is part of a separate and ongoing process.

“Debtors, however, continue to have stablecoins that must be monetized to fund their operations in this Chapter 11 case given their market stability compared to other types of cryptocurrencies,” the filing said.

Celsius’s official committee of unsecured creditors struck a deal with the office of the US Trustee in early September to appoint independent examiners, provided they took certain steps to limit the amount of time and funds that examiners would take.

Celsius agreed to join the examiner, and the judge signed the deal on Wednesday last week. Meanwhile, the trial for the proposed sale of Stablecoins is planned for October 6, 2022

On the other hand, a mid-August court document revealed Celsius expected to run out of funds in October. One of the actions a company may take is to sell its assets through the bidding process.

CEO Of Crypto Company Celsius Resigns Amid Bankruptcy Process. The bidding process is led by Centerview and the deadline for bidding will end on September 21, auction of bids if necessary will take place on September 23, and the final sale hearing on October 6.

While details about the bidder remain classified by Celsius, unsecured creditor firm Alameda Research published an initial offer that the bankrupt company rejected, and Ripple Labs has expressed interest in some of the debtor’s company assets.

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