Celsius requests permission to sell off its stablecoins

Celsius Networks, a crypto lending company that had frozen the withdrawals in June and has been proceeding through Chapter 11 bankruptcy since July, asked the United States Bankruptcy Court for the Southern District of New York for permission to sell its stablecoin holdings. This should let the company generate liquidity to help “fund the Debtors’ operations.”

A notice was filed by the Celsius’ legal team from Kirkland & Ellis law firm on Sept. 15, a hearing where the court would accept or decline it will take place on Oct. 6.

According to the filing, the company currently holds an equivalent amount of $23 million in eleven different stablecoins. If sold, these funds would go to support Celsius’ current operations. Citing section 363 of the Bankruptcy Code, the filing notes:

“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.”

Celsius recently filed a motion, pledging to partially return money to customers. However, it would only apply to Custody and Withold Accounts and for custody assets worth $7,575 or less in value. The move drew the critics from some industry leaders, as the limitation means that only $50 million out of $210 million could be released.

The pressure on Celsius continues to rise as on Aug. 31, an ad hoc group of 64 custodial account holders filed a complaint to recover their assets. The plaintiffs noted that Celsius has “not honored any withdrawals from any programs,” including custody services.

According to the complaint, that contradicts the “plain language of the debtors’ terms of use,” as they provide that title to custody assets “always remains with the user.”