Celsius Network Granted Approval to Convert Alternative Cryptocurrencies into Bitcoin or Ethereum

Updated: 01 July 2023

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The bankruptcy proceedings of the now-collapsed Celsius Network have been a widely covered event, given the size of the company. As one of its recent developments, the crypto lender has been granted permission to liquidate its altcoin reserves into BTC or ETH to pay off investors who lost money.

$186.04 Million Worth of Altcoins May be Liquidated

The bankrupt entity managed to achieve a major breakthrough as Judge Martin Glenn of the Bankruptcy Court for the Southern District of New York granted approval for its proposal to convert altcoins into Bitcoin (BTC) and Ethereum (ETH). This critical court hearing brought much-needed clarity to the company’s plan for repaying its customers, putting an end to the previous uncertainties that surrounded the process.

With the approval of Celsius’ proposal, a significant shift in the company’s financial strategy could be expected in the present and future. Following constructive discussions with the U.S. Securities and Exchange Commission (SEC), Celsius states to be diligently working on an updated bankruptcy plan that primarily revolves around distributing Bitcoin and Ethereum to its creditors.

Celsius will be selling all altcoins from all customers (except Custody and Withhold accounts) starting July 1st and will be converting them into Bitcoin and Ethereum.

— Celsians (@CelsiansNetwork) June 15, 2023

The altcoin portfolio held by Celsius, estimated to be valued at around $187.04 million, including notable assets like BNB, Celsius, MATIC, FTT, and AVAX, will be converted into the more liquid and widely accepted BTC and ETH. This will add to the already massive BTC and ETH holding of Celsius, which is worth about $409.03 million. The repayment to users who lost funds was announced to start from the 1st of July.

The strategic decision to convert altcoins into BTC and ETH demonstrates Celsius’ proactive approach to maximizing the value of its assets. By focusing on the two most prominent and liquid cryptocurrencies, Celsius may be aiming to enhance liquidity and significantly improve its ability to fulfil its obligations to the numerous victims affected by its unfortunate financial collapse.

To ensure utmost transparency and accountability during this critical phase, the court has directed Celsius to submit a comprehensive monthly report known as the “Budget and Coin Report.” This detailed report will provide explicit insights into the conversion process, outlining the exact number of Celsius’ top altcoins being converted into BTC and ETH. Celsius claims that it shall aim to foster transparency and reinforce its commitment to operating in a trustworthy manner throughout the challenging bankruptcy proceedings by adhering strictly to this reporting requirement.

What had happened to Celsius Network?

In 2022 after the market crash, the cryptocurrency industry faced significant instability and volatility, triggered by financial problems like inflation, a weak stock market, and increased interest rates by the US Federal Reserve. As a result, people became fearful of their crypto investments losing value and began withdrawing funds from the Celsius network, converting them into cash and more stable assets.

This withdrawal trend intensified concerns among other investors about Celsius’ ability to repay all deposited crypto funds, leading to a panic and a subsequent rush of people withdrawing their investments from Celsius. Fearing further loss of funds, Celsius Network froze all crypto withdrawals, swaps, and transfers, citing “extreme market conditions.” This move instilled fear in users that Celsius had become insolvent and incapable of repaying their investments.

Shortly after the announcement, the value of the Celsius cryptocurrency dropped by 70%, and the decline continued in the following days. On July 3, 2022, Celsius announced a layoff of 23% of its staff, indicating rising liquidity issues. Finally, on July 13, 2022, the company filed for bankruptcy, marking the culmination of its financial struggles amid the turbulent cryptocurrency market.