A situation that, of course, is neither optimal nor idyllic, but is the result of Chapter 11, which will allow the crypto company to continue working while it seeks an agreement with its creditors. And they are the ones who have tied up their funds to this platform.
A story similar to the story of many other bankruptcies, which will also be even more problematic for users working outside the US, at least in these initial stages. But let’s see what’s at stake and how the actions of users and lenders may change in the short term.
Options that are obviously limited in the short term by the small liquidity that the group has, which, however, can be enriched by the resources of the mining division, which will still have liquid reserves in Bitcoin.
In any case, it will be, and woe to anyone who thinks otherwise. This is a relatively long road, which will begin with the fact that the crypto company will try to recover its claims from third parties (like ZAC, which is also in bankruptcy proceedings), and then begin to offer customers a choice between two options.
The first option is to get a partial but final refund, the second is to switch to long positions in cryptocurrency, that is, to tell ordinary mortals that they need to go and wait until the company may get back on its feet.
With an additional problem, which is that at the moment no one knows exactly how the American courts will react to the bankruptcy procedure applied to a company dealing with cryptocurrencies. This issue has also been raised by Barnes & Thornburg, as CryptoSlate notes.
Many will look for ways to escape
The situation is quite complicated, as is the case with all bankruptcies of this scale, with additional uncertainty regarding the group’s assets and ability to make even short-term payments.
So far, the “ball” is going back to the court, and the initial decision-making period is about six months. Meanwhile, there will be news about how, in this case, mostly customers will have to move, including from Europe.
Not custody, but transfer – and this can push users into the background
The last of the emerging scenarios is that Celsius’ TOS will not classify the transfer as storage, but as an actual transfer of ownership. If it were also the opinion of the court, we would face new problems for customers.
Because they would become Series B creditors, i.e., repayable after preferential debts. A difficult situation, but it at least potentially gives customers a chance to see money again. In the case of outright bankruptcy, this possibility would be even more remote.