Celsius transfers Ethereum worth $1 billion to centralized exchanges (CEX), raising hope among creditors for a possible repayment scenario.
Defunct Crypto lender Celsius has moved a massive $1 billion in Ethereum to centralized exchanges, which has sparked hope among industry insiders that the company is gearing up for repayment to the affected parties.
On January 25, the insolvent cryptocurrency lending platform executed 13 transactions. It transferred a substantial amount of 443,961 ETH to wallets associated with centralized exchanges such as Coinbase Prime, Paxos, and FalconX.
The move comes as anticipation grows that Celsius will commence the repayment of creditors with liquid cryptocurrencies starting in mid-February.
Before the firm declared bankruptcy, Celsius played a precarious strategy in promising sky-high returns through risky investments. However, a liquidity crisis was triggered after the TerraUSD crash in 2022.
Unable to sustain promised payouts, Celsius paused withdrawals, froze user funds, and filed for bankruptcy in July 2022.
A large transaction was recorded on January 26. A significant amount in Ether moved from the Celsius Network wallet toward deposit wallets associated with Coinbase Prime and Paxos.
The largest transaction involved in the transfer was 443,961 ETH, which, according to today’s valuation, sits close to $984 million. The transaction was conducted from Celsius to another network-controlled wallet, signaling preparations for subsequent movements shortly.
Arkham, a blockchain intelligence firm, reported 13 transactions that followed an hour after the initial transaction. The transaction facilitated the transfer of a substantial amount of ETH to Coinbase and Paxos linked wallets.
Spotonchain, a blockchain analytics firm, has revealed that out of 443,961 ETH transferred, a substantial portion amounting to 297,454 ETH transferred to Coinbase was dispersed to 12 newly created crypto wallets. The move is seen as an indication of a potential involvement in an over-the-counter (OTC) deal.
Two days before the company made this move, it carried out another significant transaction. The transaction involved moving 575,081 ETH from an address identified as Celsius Network: Staked ETH and Celsius Network: ETH2 Depositor, which indicates that the transfer was done internally.
Since November 13, 2023, Celsius has orchestrated the movement of 757,626 ETH to FalconX, Coinbase, OKX, and Paxos. The report noted that Celsius still retains 62,469 ETH, with a current market value of $138.8 million.
So far, the bankrupt lender hasn’t come forward with a reason for conducting this significant transaction; however, some deductions are being made as possible motives for the company.
Look at the updated FAQ section of Celsius asset distribution, which was updated on January 12. You will find that the company has stated that a limited number of corporate accounts owed money by Celsius can receive cryptocurrency through Coinbase.
According to the updated section, the non-corporate account distributions for creditors within the United States will be facilitated through PayPal. In contrast, distributions for creditors outside the U.S. will be processed via Coinbase.
The Celsius NewCo Community, a group of Celsius creditors on X (formerly Twitter), anticipates the initiation of liquid cryptocurrency distributions to creditors by mid-February.
They also noted that the distribution period will remain open for one year. In the meantime, a Celsius user named TheHawk has reported that they have successfully removed all their ETH from Celsius. They also stated that the move ETH now sits in the custody account rather than the Earn account.
Additional transactions between January 8 and 12 saw Celsius transferring $95.5 million to Coinbase and $29.7 million to FalconX, as per data from Arkham Intelligence.
The insolvent crypto lending firm disclosed earlier in the month that the asset shifts they have been making are a strategic move by the company aimed at ensuring ample liquidi壯陽藥 ty for potential asset distribution.
In financial terms, liquidity relates to the ease with which an asset can be bought or sold in the market without significantly affecting its price.
Celsius also announced its intention to unstake existing Ether holdings to offset certain restructuring costs and expedite ETH release for timely creditor distributions, with no pending ETH withdrawals for staking, according to Nansen, another blockchain analytics firm.
On January 9, administrators overseeing Celsius’ bankruptcy filed an intent to notify creditors that account holders who withdrew more than $100,000 within 90 days preceding the firm’s July 13, 2022, bankruptcy declaration might be required to return those funds by January 31, 2024.
If you are wondering why Celsius has decided to execute such a move, the reason behind this is that they are utilizing a financial strategy called Preference recovery.
In bankruptcy proceedings, preference recovery allows the recovery of certain payments made by a debtor (in this case, Celsius) to creditors within a specific timeframe before the bankruptcy filing.
The rationale behind this is to prevent individual creditors from gaining an unfair advantage over others by getting their money out just before the company collapses, leaving other creditors with less or nothing.
So far, the effects of the recent move by Celsius, which transferred a substantial amount of Ethereum, haven’t been felt in the crypto market, as the price of ETH is holding steady at $2270 (at the time of writing).
It will be interesting to see whether or not Celsius will be able to refund the affected creditors fully and under what terms.
