Celsius’ ETH sales raise cash, eyebrows from creditors

Celsius creditors want their crypto returned ahead of the bull market as part of the firm’s exit from bankruptcy


Bankrupt crypto lender Celsius could exit bankruptcy as early as January, if stakeholders agree to move forward on a court approved plan.

Ethereum chain watchers observed the wallets belonging to the debtors have sold close to $250 million in ether in recent months, an amount that roughly matches the expected capital needs of the entity, known as MiningCo, that would emerge from bankruptcy. 

The recent developments in the Celsius case reveal a shift in the company’s post-bankruptcy business plans, primarily influenced by regulatory considerations and the need to satisfy creditor claims.

Initially, the restructuring plan for Celsius included not only bitcoin mining but also “staking” fees generated by validating blockchain transactions, and by managing its legacy portfolio of cryptocurrency loans.

This plan was spearheaded by Fahrenheit, also known as NewCo, a consortium led by Arrington Capital. The group was initially selected to lead the reorganized company as part of Celsius’ exit from bankruptcy, and acquired a minority stake in the reorganized Celsius, for $50 million, with the intent to list the new company’s stock on Nasdaq exchange.

However, this initial plan faced scrutiny from US regulators, specifically the Securities and Exchange Commission, which led to a pivot in strategy​​​​.

Read more: Celsius Network payment plan approved by New York judge, now it’s up to the SEC

The SEC’s skepticism about some of Celsius’ planned business lines, particularly around crypto lending and staking activities, prompted Celsius to refocus solely on bitcoin mining. 

Consequently, Celsius decided to hold back certain assets that would have been transferred to the new company under the initial plan and instead liquidate them as part of winding down its bankruptcy.

Loading Tweet..

Sales of ether (ETH), including Celsius’ recent transactions, appear to be part of that broader strategy, under which Celsius should also distribute approximately $1.98 billion in the form of ether and bitcoin to creditors.

‘Creditors’ losses were crypto losses, not dollar losses’

In a letter to the bankruptcy judge, Tuesday, major creditor Simon Dixon argued that there are no “viable alternatives to the MiningCo transaction before the court,” and therefore it should proceed unhindered.

Dixon, who has personal and business claims against Celsius amounting to about $20 million, expressed concerns that the court could be considering seeking additional approval or consent again from the stakeholders for a revised exit proposal.

He worries that this “re-solicitation” would waste time and money and “could ultimately result in the rug pull scenario happening.”

Loading Tweet..

In the context of bankruptcy litigation, a “rug pull” metaphorically describes a situation where stakeholders expect a certain resolution or benefit from the bankruptcy process, but due to unforeseen complications or delays, these expectations are not met.

For Celsius’ creditors, that could mean they would fail to benefit from the rising market price of crypto assets, Dixon explained in the letter.

“As of the Petition Date, the bankruptcy fixed the value of crypto in dollar terms. However, creditors’ losses were crypto losses, not dollar losses,” he wrote.

As the price of bitcoin rises, ordinary depositors and users of Celsius could expect to recover 100% of their losses in US dollar terms, but any surplus value would, paradoxically, flow to subordinated claims.

“If the price of Bitcoin rises only 25%, or to approximately $54,000/per BTC, the risk will become a reality,” Dixon said.

Loading Tweet..

According to Jed Breed, founder of venture firm Breed, the debtors’ sales of ether may have run their course.

“The ultimate goal is to return to Celsius customers as much funds as possible and I hope whatever direction this bankruptcy goes that happens,” Breed said on X.

A hearing with Chief Judge Martin Glenn is scheduled for Thursday to consider the next steps.

Don’t miss the next big story – join our free daily newsletter.


Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg


In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.


BUZZ holds shares of Coinbase, Robinhood and MicroStrategy


Opinion: Even though I didn’t pay for my “Diamond Hands” burger with BTC, don’t let that fool you into thinking that crypto’s development is futile


The results mark “a major positive inflection point,” one analyst says, as the exchange carries net income momentum into a crypto rally


While the slate of 10 US spot bitcoin funds have tallied $4.6 billion of net inflows thus far, half of the field is lagging the leaders


Trading volumes totalled $154 billion in Q4, including $125 billion in institutional volume


DeFi on Bitcoin is all the rage right now and Stacks is positioned to benefit