Celsius Network has emerged as another emblematic platform reflecting the hubris of certain crypto firms in promising more than they can actually deliver. Celsius collapsed into Chapter 11 bankruptcy during a time of dramatic volatility, catalyzed by the collapse of TerraUSD, a stablecoin that ended up not being stable, along with digital asset firms like Three Arrows Capital and Voyager Digital. Each of these firms cratered.
Celsius may be the most dramatic and emotive as it offered services to smaller investors, promising high returns, which ended up being illusory.
Yesterday, as part of the ongoing court proceedings, a document was filed regarding a request to allow withdrawals from certain customers – perhaps providing an avenue for some impacted clients to regain some or all of their money.
According to the court document, there will be a hearing on the “Debtors’ Motion Seeking Entry of an Order (I) Authorizing the Debtors to Reopen Withdrawals for Certain Customers With Respect to Certain Assets Held in the Custody Program and Withhold Accounts and (II) Granting Related Relief.”
While the respondents note that:
“Allowing customers to withdraw property that could be subject to later avoidance actions would be akin to choosing to drain a sink full of water, and then trying to collect the water after it had drained through the pipes—incredibly wasteful and inefficient if your goal is to maximize water for later allocation and distribution.”
This is countered by the characteristics of the case that “the Debtors have identified significant cryptocurrency assets that they do not believe are property of their estates.” And thus, it may be retrievable in the near term – creating hope for smaller investors that they may get back some funds.
The story of the losses are compelling, with some chatter about people contemplating suicide or losing all of their money.
There are others.
While the final outcome of the hearing remains to be determined, the future of Celsius will most likely be dissolution and another chapter in the annals of profound crypto collapses.
The hearing is scheduled to take place on October 6, 2022.