Key Takeaways
- Bankrupt crypto lender Celsius moved its staked Eth (stETH) holdings to another wallet address
- This happened exactly before liquid staking protocol Lido Finance enabled withdrawals
- Earlier this month, Celsius enabled some of its clients to pull out the remaining 6% of distributable custody assets after the court approval
According to Etherscan, bankrupt crypto lender Celsius transferred 428,000 staked Ether (stETH) worth $780 million on Monday, 24 May.
These are assets that Celsius had with the liquid staking derivatives protocol, Lido, which enabled withdrawals on May 15.
There are speculations that the transfer is connected with Celsius’ efforts to regain already unattainable funds during the bankruptcy.
Will these funds be returned to those who were affected by the bankruptcy?
Celsius Story Up to Now
Celsius went bankrupt back in 2022 after being unable to carry out its clients’ withdrawals. Following that, the firm applied for bankruptcy..
The business model consisted of the company staking their clients’ ETH with Lido in return for stETH, which they could use as collateral on other platforms to generate yield. After going through financial problems, Celsius became unable to convert the stETH back into ETH.
Its ex-director of financial crimes compliance, Timothy Cradle, said back then that “the biggest issue was a failure of risk management.”
“I think Celsius had a good idea, they were providing a service that people really needed, but they weren’t managing risk very well,” he asserted.
Earlier this month, Celsius enabled some of its clients to pull out the remaining 6% of distributable custody assets after the court approval. But, these were the same users who already could withdraw up to 94% of their funds in January this year.
After it was accused of bad record keeping, Celsius filed for consolidating for its US and UK clients.
What did CEO Mashinsky do?
Celsius and its former CEO, Alex Mashinsky, have been under investigation since the firm crashed. New York State Attorney General (NYAG) Letitia James filed a formal complaint against him, claiming he “promised to lead investors to financial freedom but led them down a path of financial ruin.”
Mashinsky said all was “parrots misinformation” and filed a response seeking to dismiss the New York State complaint against him.
Is there a chance for customers to get their assets back?
In an attempt to cover the losses, Celsius kicked off an auction on April 22, seeking to find a buyer.
The company will be able to choose between three interested parties: NovaWulf, Fahrenheit, and Blockchain Recovery Investment Committee (BRIC).
There is, however, still no deadline for final offers, but the auction could be over soon, even as soon as even next week – May 29.
One of the company’s creditors, Simon Dixon, said the company may be “lining up for staking directly without Lido in the middle.”
Conclusion
It is not expected that Celsius will share the fate of Voyager Digital after Binance decided not to buy it.
According to Celsius attorney Ross Kwasteniet, the company will probably choose NovaWulf or Fahrenheit’s offer. She told U.S. Bankruptcy Judge Martin Glenn the auction has taken longer than expected, but has been highly competitive.
Over 1.7 million registered users and approximately 300,000 active users with account balances greater than $100 could soon get their assets back.
Teuta is a seasoned writer and editor with more than 15 years of experience. She has expertise in covering macroeconomics and technology as well as the cryptocurrency and blockchain industries. She has worked for several publications as a journalist and editor, including Forbes, Bloomberg, CoinTelegraph, Coin Rivet, CoinSpeaker, VRWorld and Arcane Bear.
Teuta began her professional career in 2005, working as a lifestyle writer at Cosmopolitan in Croatia. From there, she branched out to several other publications, covering mainly business and the economy. She then turned her attention to the world of cryptocurrency and blockchain, believing that crypto is among the most important inventions in the history of humanity. Her involvement in fintech began in 2014 and she has since lent her expertise in writing, editing and gathering information about the world of crypto, blockchain, NFTs and Web3.
An all-round news hound, mentor, editor, and writer, Teuta enjoys teamwork and good communication. She holds a WSET2 diploma and has a thing for chablis, punkrock music and shoes. She also holds a double MA in Political science and Entrepreneurship.
