By George Ward
In its attempt at a supposed revival plan, Celsius Network made a court filing to the United States Bankruptcy Court for the Southern District of New York on September 15th, which is yet to be approved.
The filing says Celsius wants to sell $23 million worth of its stablecoin holdings comprised of 11 different asset types, as affirmed by the lender’s lawyer, Joshua Sussberg.
There was no specification on their exact stablecoins or how they were acquired, but Celsius claims this movement was to generate more liquidity to fund its business operations.
With Celsius not establishing ownership of this asset, creditors seek to stop the $23 million sales with a motion filed on Tuesday to deny the approval of Celsius’s claims.
Celsius Liquidity Crisis
Celsius’s ongoing chapter 11 liquidity crisis hearing came to light when it started freezing users’ withdrawals in June. Before its bankruptcy announcement, Celsius Network provided institutional and retail loan services using stablecoins.
Since its bankruptcy filing, an interim cash management order was issued, which prevents the selling of its crypto assets without permission from a judge.
“Not your keys, not your coins” is a famous phrase that has kept investors wary of centralized crypto lending platforms’ terms and services.
During the early days of the Celsius Network legal proceedings, one critical legal question was if the crypto assets in Celsius’s possession were owned by it.
Unfortunately, there isn’t any backing stating that digital assets on its platform belonged to its users, nor does it guarantee a refund in a state of insolvency.
Celsius Network clearly states these facts in its terms of service. Celsius Network hasn’t demonstrated ownership which has led its creditor to protest against the lender’s claims saying it is not their responsibility to know which crypto asset is property of the estate.
They claim that if Celsius lays no claim to the stablecoin, they should not be permitted to sell these assets.
The creditors went further that in a scenario where Celsius refuses to define ownership of the assets it should show proof of immediate need and a guarantee that affected user accounts are protected.
A court proceeding on the dispute between Celsius Network and its creditors has been scheduled for November 1st at 11:00 AM Eastern Time as other insider issues on Celsius arise.