Celsius Creditors on Edge as Cryptocurrency Prices Soar

Even though most cryptocurrency investors have reason to be optimistic this week, Celsius creditors may be ripped off if digital asset prices continue to rise.

Potentially, the insolvent cryptocurrency lending company could settle its cash-based obligations shortly by selling its recently profitable Bitcoin (BTC) and Ethereum (ETH) holdings exclusively.

That would result in the bankruptcy being granted additional assets, while the repayment period for its counterparties to reenter the cryptocurrency market would be considerably longer.

@CelsiusNewCo on X, an account managed by numerous Celsius creditors, reports that if BTC reaches $54,879 per coin and ETH reaches $3,750, the company can “rug-pull all creditors.”

The account cited a July thread from Simon Dixon, CEO of BankToTheFuture and a significant investor in Celsius, in which he utilized figures calculated by his firm.

For each coin, the estimates were derived using a 50/50 liquidation basis. The firm ceased user withdrawals in June of last year due to the collapse of cryptocurrency market prices, which prompted Celsius to declare bankruptcy.

A subsequent examination of the organization’s balance sheet revealed a debt of $1.2 billion.

The court approved the company’s insolvency restructuring plan last month. This plan entailed a transition for the company into a Bitcoin mining and staking entity, which NewCo creditors would own.

Additionally, it encompasses the allocation of BTC and ETH valued at $2 billion to Celsius’s clientele. In June, Celsius initiated the consolidation of its digital assets into these two currencies.

Dixon’s July thread states that if BTC and ETH continue to rise, the insolvency can repay all USD claims while retaining all other assets.

Customers expressed a range of emotions regarding this outcome during their Tuesday discussion. Others, who had waited 18 months without obtaining their owed cryptocurrency payouts, were amenable to any immediate resolution that could help.

On X, @jboinvest stated, “I wish they would do it so I could F*cking move on with my existence.”

On Tuesday, Bitcoin reached a new yearly peak of $44,000. This is a 16% increase over the previous week and an 117% increase since July 12, 2022, when Celsius filed for bankruptcy.