According to the latest news, it appears that Celsius is implementing a reorganization plan that involves converting its altcoin positions into the two main digital assets, Bitcoin and Ethereum.
The news is also being reported on Twitter:
This is in order to address growing regulatory concerns and maximize the value of its assets.
Let’s look in detail at what is happening.
Summary
Celsius’ plans for the future: Bitcoin and Ethereum
Cryptocurrency lender Celsius, which is currently involved in bankruptcy proceedings, recently filed a revision to its bankruptcy filing.Â
Specifically, this revision was filed pending approval by a New York bankruptcy court after Celsius reached a successful acquisition agreement with cryptocurrency consortium Fahrenheit.
The cryptocurrency lender filed its reorganization plan on 15 June. The new reorganization plan aims to manage retail customers’ losses through the concept of compensation treatment.
The concept of “compensatory treatment” refers to the process of comparing losses and profits in a given year.
Hence, losses that cannot be offset against income in one year can be carried forward and offset against income in subsequent years.
The “offsetting treatment”: what is it and how does it work?
In this regard, a Twitter user explained how the offsetting treatment works based on the portion of the loan that is repaid, as we read:
However, according to David Adler of the law firm McCarter & English, Celsius’ restructuring proposal may face resistance from borrowers.
In fact, he noted that the debtor, i.e., Celsius, is demanding repayment of the loans, but is not fulfilling its contractual obligations, such as returning the collateral to the borrowers.
This could arouse opposition from the borrowers, he therefore achieved:
In addition, Celsius has submitted a request to appoint Chris Ferraro as a foreign representative to handle cross-border insolvency settlements at a court in the United Kingdom.
This move aims to protect the company’s UK assets and to have Chapter 11 in the United States recognized as the main foreign process for a global resolution.
As we know, on 13 June 2022, Celsius suspended withdrawals as a result of bad investments and the impact of the collapse of the Terra ecosystem on cryptocurrencies.
Celsius begins the process of withdrawing its Lido Staked ETH (stETH)
Recently, Celsius has been trying to recover its Ether Staked (ETH) from the Lido liquid staking platform, which recently allowed withdrawals.
Thus, Celsius has started the process of withdrawing its Ether Staked via the Lido protocol. According to transaction data, the company has requested the withdrawal of 428,084 stETH tokens in batches of 1,000.
Currently, the value of this stash is estimated to be around $784.7 million. This move follows a similar stETH withdrawal operation carried out on 15 May as preparation for this phase.
Once the withdrawal process is completed, Celsius will receive the equivalent in Ether, while the stETH tokens will be burned by Lido.
According to Dune Analytics, the total amount of stETH in the queue for withdrawal is 442,000 from 141 requests. This amount has an approximate value of $808 million, although most of it is due to Celsius.Â
So far, 629 ETH have been processed, according to Dune. On 16 May, Lido said it had enough Ether in its buffers to handle the withdrawal requests.
However, if the number of Ether withdrawal requests from Celsius on Lido increases, it could affect the network withdrawal queue, as this is a dynamic process.
Lido is currently the largest staking provider, with a market share of nearly 30%. As a result, if there are a lot of requests waiting, it may take Celsius some time to get its ETH back.
