The now bankrupt crypto lender, Celsius Network, has asked the court for permission to sell stablecoins in its possession to generate funds to run its operations.
A $23 Million Stablecoin Stockpile
The company, which is currently in the midst of a chapter 11 hearing at the U.S. Bankruptcy Court of the Southern District of New York, claimed it owns more than ten different stablecoins with a market value of approximately $23 million.
Celsius used stablecoins in its retail and institutional lending services, which were halted after the company filed for bankruptcy.
An interim cash management order was placed against Celsius, prohibiting the monetization of any crypto asset in the company’s possession without the court’s consent. Celsius, however, believes that selling its stablecoins would help generate some of the liquidity needed to run its operations.
Earlier, the crypto lender had indicated that it was on course to run out of funds by October. Among its ideas to generate funds was the proposal to sell bitcoin mined by its subsidiary, Celsius Mining.
Stablecoins Will Not Expose Celsius to Economic Risk
In the new filing, Celsius noted that since stablecoins were usually pegged 1:1 with the dollar or other fiat currencies and their value did not fluctuate, they could be a more reliable source of funds for the beleaguered company than the regular and more volatile cryptocurrencies. Celsius also pointed out that it made more sense to sell its stablecoin holdings instead of seeking outside financing that could expose the company to further economic risks.
The hearing to discuss the proposed stablecoin sale is scheduled for October 6 before Judge Martin Glenn. If approved, proceeds from the sale will be used primarily to pay for the crypto company’s operations, including funding its obligations in the chapter 11 cases.
Judge Approves the Appointment of an Independent Examiner to Investigate Celsius Network
In related news, Judge Martin Glenn of the Bankruptcy Court of the Southern District of New York on Wednesday granted a motion for the Office of the U.S. Trustee to appoint an independent examiner to look into the financial affairs of Celsius Network.
While making the ruling, Judge Glenn stated that the examiner’s scope would include scrutiny of the crypto company’s digital asset holdings and why it changed its offerings from the Earn program to the Custody service for some customers while placing others in a Withhold account.
The examiner will also investigate the procedures Celsius used to pay taxes and the current status of the utility obligations of its bitcoin-mining operation.
The crypto lender reached an agreement with a group of creditors last week to allow an independent examiner to investigate the company as it goes through the bankruptcy process. However, the group insisted that the examiner’s scope be limited to save on cost and time.
U.S. Trustee Claims Celsius Lacks Transparency
In August, the Office of the U.S. Trustee filed the motion to appoint an independent examiner for the Celsius case through its Region 2 representative, William K. Harrington. The Trustee’s office felt the move was necessary after claiming the Celsius leadership was not forthcoming about the company’s true financial position.
Once approved, the examiner will have a week to present a budget and a work plan. The court will then have another week to approve the budget, after which the examiner will have two months to file a report.