Struggling cryptocurrency lender Celsius Network wants court permission to return digital assets to some users, according to the latest bankruptcy court proceedings.
Hoboken, N.J.-based Celsius requested permission to release cryptocurrencies in its custody program and withholding accounts, which are for storage rather than generating returns. Roughly $210 million in assets are currently in its custody program accounts and $15 million in withholding accounts, according to reports. Celsius says customers own those cryptocurrencies, not the company. The court scheduled a hearing on the request for Oct. 6.
Celsius had 1.7 million users and $11.8 million in digital assets under management in May. And its staking services provided users attractive offers of up to 18% returns on their crypto holdings by lending them out. However, Celsius lent roughly $75 million to fellow lending service Three Arrow Capital (3AC), which collapsed with the crash of Terra (LUNA). With 3AC unable to repay the loans and fearful investors withdrawing funds, Celsius began to face a liquidity crunch.
Subsequently, Celsius froze withdrawals and transfer activity in June, citing extreme market conditions. As its financial position worsened, Celsius reportedly entered talks regarding a possible buyout by FTX. But the crypto exchange walked away due to a $2 billion hole in Celsius' balance sheet. By July 13, the lender had filed for Chapter 11 bankruptcy protection.
CEL Price Action
Celsius' CEL token has tumbled from its all-time-high around $8 last June. The cryptocurrency fell following the LUNA crash and the company's ensuing financial woes. But it popped more than 25% after Celsius said it wanted to unlock funds for a sliver of its customers.
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