An Insight Into Celsius Exiting Bankruptcy!
From high hopes and the promise of a bright future, Celsius Network took the cryptocurrency world on a rollercoaster ride. It came with promising bright prospects and high returns but ended dramatically in 2022.
This caused a massive uproar among many users, with millions of funds frozen on the platform and 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 in the process of paying back.
Let’s know the details.
A Celsius Timeline of the Up and Down!
Celsius Network launched its platform with good interest-paying accounts for crypto holdings in 2018. Left and right, crypto holders from all over the world now use the platform. The platform has gained explosive growth, reaching millions of users with high yields. It has continually seen an exponential increase.
The boom period made Celsius one of the biggest worthed crypto-holding platforms!!! But who could predict the calm before the chaos?
Towards the close of July 2022, the crypto markets began to collapse. Celsius suddenly stopped allowing customers to withdraw their funds from the holding accounts. The only reason given was "extreme market conditions."
Panic spread like wildfire among its users.
Worse, in the same month!!! Due to the financial stresses, Celsius made a domestic filing for bankruptacy under Chapter 11 in the United States.
The company's goal was to reorganize itself financially. Things got thick with the resignation of the former CEO Alex Mashinsky after reports emerged that he was accused of manipulating the CEL token price on the platform.
As of today, he is still claiming his innocence as he waits to be tried.
Read more: FTX’s Bankruptacy and Solana Sale!
Celcius Emerging from Wreckage
Fast forward to February 2024!!
Finally, there is light at the end of the tunnel for Celsius's creditors.
After almost 18 months of courtroom jousting, the court finally granted Celsius permission to emerge from bankruptcy. The company will pay creditors over $3 Billion but with a catch! If it materializes, the settlement will not be in cryptocurrency.
The amounts that would be received are going to be composed of:
Fiat Money
That is a great relief to all, yet the return of amounts will surely not be in any form of cryptocurrency. Instead, the creditors would get some of their money in stable and government-backed currency, including the United States dollar.
Again, this shows how unstable the cryptocurrency market is.
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. However, we cannot ignore the inherent risks associated with the cryptocurrency market.
The approval for this type of return was given by almost 98% of creditors for this plan. This highlights that some of their funds will be recovered in reliable fiat currency.
A Stark Reminder!
The Celsius saga is a strict reminder for crypto holders:
Never put all your eggs in one basket.
Only throw your money into any cryptocurrency or crypto-related product by educating yourself about the same. Attractive as high-yield crypto lending platforms may sound, they all come with their risks.
The future of Celsius fully returning to the market and the overall cryptocurrency market remains uncertain. However, one thing is clear for Celsius creditors: the wait for the retrieval of their money is finally over, even though it is not in the form they expected.
Only take a crypto-decision with complete crypto information. Crypto Accountants can help you here. We offer crypto tax, compliance, and due diligence services to enthusiastic crypto fans.