RECAP: Bankruptcy proceedings for CelsiusNetwork have officially begun – and the odds that depositors will get their money back look slimmer than ever. cheyenneligon and sndr_krisztian report
The firms claimed that most of the drop was due to the collapse in crypto prices, shrinking its assets by $12.3 billion.Users withdrew $1.9 billion from deposits up until June 12, the date when the company suspended withdrawals.Tether, the issuer of the largest stablecoin USDT in the market and also an investor in Celsius, set back the firm by an additional $900 million when it liquidated aA breakdown of Celsius’ asset losses in court filings.
Celsius admitted it also lost about $15.8 million in Terra’s collapse, but the “widespread and completely misleading Twitter and social media commentary,” as the company’s legal advisor said during today’s hearing, prompted a run on its deposits in the first place.
At Monday’s hearing, Shara Cornell, an attorney with the U.S. Trustee Program, voiced her concerns about the viability of Celsius’ mining operation. Pat Nash, Celsius’ lead attorney, told the court that the mining subsidiary was mining approximately 14.2 bitcoins per day – and expected to mine 10,100 bitcoins in 2022.
“In particular, Celsius has pointed out in its pleadings that customers transferred ownership of crypto assets to Celsius, making those customers unsecured creditors. This detail may undercut customer expectations, who thought they were depositing their assets into a construct similar to a traditional bank,” Gwen added.
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