The once mighty crypto lender Celsius Network announced this week that it will unstake existing Ethereum (ETH) holdings worth over $470 million, freeing up the funds to help finance upcoming distributions to creditors.
Celsius had previously relied on income from its staked Ether, which was earning yields of 4-5% annually, to cover costs during its ongoing bankruptcy restructuring process.
In a tweet , Celsius said: “The significant unstaking activity in the next few days will unlock ETH to ensure timely distributions to creditors.” According to on-chain data analysis, crypto wallets linked to Celsius currently have over $151 million worth of Ethereum staked.
While the staking rewards may not have led to major Ether sales previously, they likely contributed to negative sentiment and selling pressure on ETH.
In preparation for unstaking its Ether, the former lender transferred over 30,000 ETH (approximately $47 million) to custodian Fireblocks over the past week. Some of those funds were then deposited to crypto exchange Coinbase, where they will likely be exchanged for stablecoins.
Celsius filed for bankruptcy in July 2022 after abruptly freezing customer withdrawals, citing “extreme market conditions.” At the time, it only had $167 million in liquidity remaining against $4.7 billion owed to depositors. Many users faced major losses with little legal recourse under Celsius’s terms of service.
Since then, the company has weathered continued legal drama, management changes, and the intricacies of Chapter 11 bankruptcy proceedings. But a transition plan is now in place that will transform the company into a user-owned Bitcoin miner called MiningCo.
Last month, the bankruptcy court gave final approval for Celsius to proceed with its restructuring plan. Celsius account holders will receive 100% of MiningCo’s equity under the approved restructuring deal. According to court documents, account holders can expect to recover between 67% to 85% of their locked up deposits through equity disbursements and direct cryptocurrency paybacks.
You can read our timeline of the Celsius bankruptcy proceedings here.