Crypto lending company Celsius has transferred over $10 million worth of Ethereum to an exchange on Wednesday, just 6 days after a judge approved the firm’s bankruptcy plan.
Transitioning to a New Model
According to on-chain data tracked by Lookonchain, Celsius moved 5,160 ETH worth around $10.49 million to the institutional trading platform FalconX. The bankrupt company is currently transitioning to a new model under creditor ownership.
Celsius filed for bankruptcy back in July 2022 amid a wider downturn in the cryptocurrency market. Under the newly approved plan, Celsius will be converted into a crypto mining and staking firm called NewCo, which is expected to have a $1.25 billion balance sheet. A portion of this balance sheet will consist of liquid crypto assets that can be staked to generate yields.
The transfer of Ethereum suggests Celsius may be looking to sell some holdings to raise capital as part of this transition. Ethereum prices have climbed nearly 70% since the start of 2023, recovering from the lows seen last year. The timing could allow Celsius to offload ETH at relatively favorable rates.
Liquidating Holdings
According to Lookonchain, Celsius has also recently moved various other tokens to exchanges like Binance and OKX. These include stablecoins, governance tokens like SPELL, and utility tokens like BAT. The bankrupt company seems to be liquidating parts of its portfolio across the board.
Last week, a judge approved a restructuring plan that will formally sign over ownership of Celsius to its creditors. Under the new ownership structure, creditors are expected to benefit from the staking yields generated by Celsius’ remaining crypto assets. Estimates suggest the staking operation could bring in $10 to $20 million per year.
The decision came after months of uncertainty surrounding the fate of the troubled lender. Celsius halted withdrawals back in June 2022, citing extreme market conditions. The freeze left thousands of customers unable to access their assets held on the platform.
The firm’s bankruptcy filing followed shortly after, with Celsius owing creditors nearly $5 billion at the time. The restructuring plan lays out the terms for creditors to recover a portion of the owed funds.
With ownership now being transferred to creditors, Celsius is distancing itself from its former retail lending model. The approved bankruptcy plan explicitly forbids the newly formed entity from “engaging in lending or rehypothecation of assets.”
Instead, NewCo will function solely as a crypto mining and staking enterprise, using protocols like Lido to generate staking yields from assets like Ethereum. Liquidating ETH holdings to exchanges aligns with this strategy pivot.
The year-long Celsius drama highlights the risks associated with crypto lending platforms. Attractive yields enticed customers, but overly speculative practices put customer deposits in jeopardy when markets declined. With new management in place, Celsius hopes to chart a more sustainable path forward.
