The bankruptcy court orders Celsius to return funds to users
Bankrupt crypto lending platform Celsius is under stress to return funds to the users.
Celsius was a popular crypto lending platform but under the high volatility situation in July of this year faced a significant negative impact & also the mismanagement of the backend funds played an important role to bring a liquidity crunch to its platform. On 13 July, Celsius filed for bankruptcy under chapter 11 in a US bankruptcy court.
On 7 December, Martin Glenn, Chief Bankruptcy Judge, issued an order for Celsius to release $44 million worth of crypto funds to creditors of Celsius.
These $44 million funds, including also those funds that didn’t belong to Celsius’s interest-bearing accounts. Indeed just before the bankruptcy filing, Celsius transferred approximately $200,000 worth of crypto funds to its custody accounts to increase the fund ownership of the company, which was not a fair activity.
Last year, Celsius secured court approval to extend the timeline to submit its Chapter 11 reorganisation plan until Feb. 15.
Earlier this few months ago, a few reports noted that Celsius key officials were trying to bring a solution to reorganise the service of this bankrupt platform under a new branding. But the Celsius team never talked about this thing publicly, which hints that Celsius is failing at every level and is going to disappear forever from this sector.
This year many Crypto lending platforms faced downfall because of multiple reasons. Voyager Digital is an institutional-level digital assets lending platform that collapsed badly and now Binance & CrossTower like big companies are planning to acquire this platform.
Besides these crypto lending platforms, BlockFi, Genesis Global Trading, FTX exchange with Alameda Research, and Three Arrow Capital filed for bankruptcy.
The majority of these companies were operating businesses without following proper procedures to manage the user’s funds & few of them were holding funds on bad crypto companies.
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