Bankrupt lending firm Celsius has recently made a significant move in its efforts to repay creditors. Over the course of the past week, the company has transferred more than $125 million worth of Ether to various crypto exchanges. This initiative follows in the footsteps of FTX and Alameda Research, who also resumed fund transfers earlier this month.
According to Arkham Intelligence, between January 8 and January 12, Celsius transferred $95.5 million to Coinbase and $29.7 million to FalconX. These transfers signify a substantial effort on the part of Celsius to meet its financial obligations to creditors. It’s worth noting that despite these transfers, the company still holds over 550,000 ETH, valued at around $1.36 billion.
The recent transfer of funds comes nearly ten days after Celsius unstaked 206,300 ETH, equivalent to approximately $407 million. This action was taken in preparation for “timely distributions to creditors.” It’s important to recognize that Celsius has been entangled in bankruptcy court proceedings ever since it filed for Chapter 11 in July 2022. The aim of unstaking the ETH was to ensure sufficient liquidity for potential asset distributions.
Interestingly, Celsius is not the only firm making significant moves in terms of fund transfers. FTX and Alameda Research, both ventures by Sam Bankman-Fried, have also begun the process of moving funds to centralized exchanges. In the past week, these two entities transferred a total of $28.2 million in digital assets, including Wrapped Bitcoin, Ether, Pendle, and People tokens. It’s worth noting that FTX and Alameda still hold approximately $1.2 billion in assets on the Ethereum Virtual Machine.
Celsius recently proposed a distinctive measure that involves users who cashed out more than $100,000 in the 90 days leading up to the bankruptcy declaration. Represented by Kirkland & Ellis, Celsius has demanded that these users “resolve their outstanding liability” or face potential litigation. The company views these pre-bankruptcy withdrawals as “avoidance actions” that are eligible for pursuit in court. To comply with the notice, affected creditors must return 27.5% of their withdrawn amount by January 31, 2024, or risk facing a clawback.
Celsius’ clawback initiative is part of its larger plan to repay creditors in accordance with the restructuring agreement. The success and potential influence of this unique approach, focused on recovering funds from private investors, remain uncertain. Should this initiative prove successful, it could serve as a precedent for other struggling platforms seeking similar fund recovery measures.
Celsius’ recent transfer of over $125 million worth of ETH to crypto exchanges marks a significant step in its repayment efforts. This move aligns with the actions taken by other firms in the industry and demonstrates Celsius’ commitment to meeting its financial obligations. Furthermore, the company’s proposed clawback initiative introduces a distinctive mechanism for recovering funds and potentially sets a precedent for future fund recovery measures. Only time will tell whether this initiative will succeed and have a lasting impact on the industry.