Celsius gets permission to sell mined BTC to cover operating expenses
Crypto lender Celsius has been granted approval by a New York bankruptcy judge to sell its BTC mined as part of its mining venture in order to keep operations afloat.
Celsius filed for bankruptcy protection
Celsius Network was granted permission to sell the BTC they mined as part of the company’s mining division. Chapter 11 is a form of bankruptcy that involves reorganizing the debtor’s assets and liabilities with the goal of mitigating the damages caused as much as possible.
If a company files for chapter 11 bankruptcy proceedings, then it must do so in the interest of creditors. Historically, many companies have used chapter 11 bankruptcy to reorganise their assets and continue their operations without shutting down the business.
General Motors and K-Mart have both previously declared Chapter 11 bankruptcy to stay in business, but Celsius does not appear to be able to continue operations so easily.
Celsius’ catastrophic mining plan
Celsius’ foray into the mining industry was touted as a huge victory when it was first announced by Mashinsky on his weekly AMAs (Ask Mashinsky Anything).
However, they seem to have launched their mining venture at the worst possible time, and since then the mining industry has suffered an extreme bear market.
In fact, Celsius’ mining venture was one of the clues that the company was facing serious problems, as they tried to take the company public at the worst possible time for mining companies – a move that was called out by Swan Bitcoin CEO Cory Klippsten.
The mining venture was actually one of the reasons that Celsius went bankrupt in the first place: by investing so heavily (with the goal of becoming the largest miner in North America) with customer funds, their assets were illiquid and they didn”t have the ability to meet with customers’ withdrawal expectations.
Will Celsius investors get their locked funds back?
The bankruptcy proceedings were brought to protect the Celsius community from any more damage, but it seems that most of the damage has already been done.
It is now clear that Celsius depositors will not get all of their money back, and the amount they do get back is likely decreasing every day.
Those who are overseeing the bankruptcy proceedings have to fight against the wishes of Celsius creditors as well as the wishes of the Celsius community.
Most importantly, however, they are focused on taking care of themselves. The lawyers and managers throughout the process will be extremely costly, especially considering that Celsius has successfully gambled away billions of dollars in client funds.
Community continues to rally in support, fueled by CEO Alex Mashinsky
The community continues to rally behind the project, instigated by Mashinsky, even as it became clear that the case was completely hopeless.
The attempted CEL short squeeze was aimed to replicate some of the successes of the Gamestop short squeeze, during which Wall Street was famously bearish on the stock and many retail traders managed to out-compete them and make the short sellers into forced buyers as they were liquidated out of their positions.
However, Mashinsky used the opportunity to dump on his community. He and his wife (both wallets are publicly known) jumped at the opportunity to sell their CEL tokens for 10 times more than they were worth before the short squeeze, which many CEL holders (and engineers of the short squeeze) view as a betrayal.
The news that they have been allowed to sell some of the BTC they mined to continue to cover their operating expenses is not good news for the holders. This is particularly intolerable from the perspective of the entire Celsius community, who already feel deprived that former ex-employees are still on the payroll.