Celsius Creditors May Get “Rug Pulled” Due To Rising Crypto Prices: Analysis

Although most crypto buyers have good purpose to be optimistic this week, Celsius collectors could also be in for a nasty deal if digital asset costs proceed to climb.

The bankrupt crypto lending agency could quickly have the ability to pay its cash-based money owed just by liquidating its newly worthwhile Bitcoin (BTC) and Ethereum (ETH) holdings alone. That might imply the chapter will get away with extra property, whereas its counterparties are repaid at a much more troublesome time to enter the crypto market.

The Celsius Dilemma

In line with @CelsiusNewCo on X – an account managed by a number of Celsius collectors – the agency will have the ability to “rug pull all collectors” if BTC reaches $54,879 per coin, and if ETH reaches $3,750.

The account cited a thread from Simon Dixon – CEO of BankToTheFuture, a serious Celsius investor – posted in July, utilizing numbers calculated by his agency. The estimates have been based mostly on a 50/50 liquidation foundation for every coin.

“It is extremely vital that we get out of Chapter 11 earlier than Bitcoin & ETH method these numbers to keep away from one other rug pull that we might want to battle onerous towards if it comes up,” he mentioned on the time.

Celsius filed for chapter in June of final 12 months after collapsing crypto market costs pressured the agency to freeze person withdrawals. A later have a look at the corporate’s steadiness sheet revealed it was $1.2 billion in debt.

Final month, the corporate gained court approval for its chapter restructuring plan, which concerned transitioning right into a Bitcoin mining/staking entity owned by NewCo collectors. It additionally entails distributing $2 billion value of BTC and ETH to its prospects – the 2 cash that Celsius started consolidating its digital property into in June.

What’s the Greatest End result?

If BTC and ETH hold rising, the chapter can repay all of its USD claims whereas retaining all different property, per Dixon’s July thread.

Clients held blended emotions about such an end result when discussing the matter on Tuesday. Whereas some have been dissatisfied about not receiving their owed crypto payouts, others have been prepared to accept any quick resolution after 18 months of ready.

“I want they’d do it simply so I can transfer on with my fucking life,” said @jboinvest on X.

Bitcoin tapped a brand new yearly excessive at $44,000 on Tuesday. That’s up 16% within the final 7 days and 117% from when Celsius filed for chapter on July 12, 2022.