Celsius Network after halting the deposits, withdrawals & transfers for nearly a month, finally files for bankruptcy during the early times of trade. The Celsius Network appears to be in hot waters as it may not settle the creditor’s dues anytime in the near future. Mainly due to this reason, the platform was more concerned to pay off their DeFi debt and hence presumed to have utilized customer funds to do so.
The platform recently had paid off $113 million in compound Debt and remained with just $123 million. Initially, the network paid off its Bitcoin loan and freed up $453 million in collateral last week. A string of repayments in USDC & DAI was carried on to repay the loans, the most recent one was made to Aave to free $410 million stETH kept as collateral.
It was much speculated before that Celsius Netwrok is facing a liquidity crisis and may file for bankruptcy similar to Voyager Digital very soon. The platform recently filed the Chapter 11 bankruptcy instead of SIPA bankruptcy. Therefore, it is quite evident that neither Celsius nor Voyager is concerned to recover customer funds.
As per the country’s regulatory authority, the Bankruptcy Code, the company can acquire all the user assets and convert them into cash. Whereas the SIPA’s proceedings are customer oriented and required distributing the claims to customers first.
However, both Celsius Network & Voyager Digital claim to protect the user accounts, but the experts believe the revival of another couple of Mt.Gox within the crypto space.