Celsius. A New Petition to the Court and a Statement From a Group of Users

Lawyers from Kirkland and Ellis filed a petition with a court on behalf of Celsius. The document requests allowing Celsius to sell stablecoins belonging to the company to cover court costs. Despite the company’s attempts to stabilize the work, the court proceedings seem to be delayed because the Celsius case is facing new legal challenges.

As we wrote earlier in August, thanks a similar petition, Celsius was allowed to sell their bitcoins to cover expenses. Therefore, it is likely that the new petition will also be considered and approved by the court.

In the petition, the lawyers point out that stablecoins are an effective tool for increasing liquidity, which will help the company pay for debtors’ operations. According to the document, the company now owns 11 different stablecoins worth a total of $23 million.

“Celsius currently owns eleven different forms of stablecoin totaling approximately $23 million. The stablecoin is held by Debtor Celsius Network Limited (UK), Debtor Celsius Network LLC (US), and non-Debtor Celsius Network EU UAB (LT).”

Also, Celsius lawyers have demonstrated that the petition to allow trading in stablecoins has legitimate grounds, referring to section 363 of the Bankruptcy Code, which should help firms to continue their activities during court proceedings without undue pressure from judicial authorities.

“Section 363 of the Bankruptcy Code is designed to strike a balance between allowing a business to continue its daily operations without excessive court or creditor oversight and protecting secured creditors and others from dissipation of the estate’s assets.”

This petition will be considered by the court on October 6.

Meanwhile, the community is not happy at allowing lawyers to claim the remaining funds in the Celsius treasury for thee court costs. A group of holders of depository accounts asked the court to return their funds, which are in the “Custody Service”.

“In June 2022, the Debtors froze all withdrawals of cryptocurrency from their platform. Since that date and since the Petition Date, the Debtors have not honoured any withdrawals from any programs, including Custody Service, even though the Custody Assets — by the plain language of the Debtors’ Terms of Use — provide that title to Custody Assets always remains with the user.”

The interests of users are represented by the law firm Togut, Segal & Segal. It seems that users are serious about getting back their crypto assets totaling $22.5 million, which are now frozen by Celsius.

According to the bankruptcy documents provided by Celsius, the total amount of the company’s debt to customers is $4.7 billion. Even if distributed, the $22.5 million will be just a drop in the total losses of investors.

The company is still active on its social networks, talking about restructuring and reorganization.

Users on Twitter are comparing the situation with the Celsius with the collapse of the Mt.Gox exchange, which stopped working after being hacked in 2014. Only in 2021 did a court adopt a plan to compensate users for losses, and this month the exchange finished accepting applications from users for damages.