Key Takeaways
- Celsius Network will begin its third round of repayments under repayment plan.
- Celsius’s recovery plan was approved by nearly 98% of creditors in 2023 and aims to reimburse clients between 67% and 85% of their losses.
- Celsius had applied for Chapter 11 bankruptcy back in July 2022 after halting withdrawals and transfers the previous month.
Bankrupt lender Celsius Network will soon begin its third round of repayments to creditors under its restructuring and repayment plan. According to the platform’s latest announcement, the defunct crypto exchange will undertake repayments amounting to $220.6 million, bringing the total asset repayment ratio to approximately 64.9%.
The recent payments combine cash and cryptocurrency paybacks and will be sent via well-known websites like Coinbase, PayPal, Venmo, and Hyperwallet. The move makes it simpler for creditors to obtain their money without the cumbersome hassle.
This is the third payback round for the corporation, following a payout of $127 million in November 2024 and the much bigger $2.53 billion that was given back to over 251,000 creditors earlier in the year.
Celsius’s recovery plan was approved by nearly 98% of creditors in 2023 and aims to reimburse clients between 67% and 85% of their losses. Along with repayments in cash and Bitcoin, the plan gives some creditors a new choice of stock in Ionic Digital, a Bitcoin mining company that was split out from Celsius’ mining operation. The idea behind the different approach is that as the business grows, creditors might benefit from both repayments and future business success.
Celsius Bankruptcy Left Investors in Doubt: What Had Happened?
Celsius had applied for Chapter 11 bankruptcy back in July 2022 after halting withdrawals and transfers the previous month. The platform had cited “extreme market conditions” as the cause of the collapse. However, the fall of one of the biggest crypto lenders had created doubts in the minds of many market participants.
Celsius’s downfall was the direct result of bold promises and risky bets that simply couldn’t hold up when the market conditions changed. The platform had lured customers with the chance to earn up to 18% interest a year. However, the returns were powered by unsecured loans and complex trading strategies.
When the crypto market crashed, made worse by the Terra-Luna implosion and mounting DeFi losses, Celsius ran out of money to cover withdrawals. In the end, it froze customer accounts and filed for bankruptcy with a staggering $1.2 billion hole in its balance sheet.
For everyday users, the collapse meant more than numbers on a ledger. It meant life savings locked away, trust shattered, and a flood of lawsuits and regulatory crackdowns that followed. Even now, with repayments more than halfway through, many creditors are still left waiting, and for most, the refunds don’t come close to replacing what they lost.
Celsius Repayments to Influence Broader Market Sentiments: Here is How
Celsius is not just assisting its own customers by paying back its debtors. The defunct lender can affect investors’ perceptions about cryptocurrency in general.
Large repayments could increase trust by demonstrating that some money can be recovered even in the event of significant crypto disasters. However, if creditors sell the money they receive from Celsius, it can put short-term pressure on the price of Ethereum and Bitcoin. In any case, the market keenly monitors the signals sent by the repayments.
The overall market for crypto exchanges and lenders had been declining for the entirety of 2022, mainly due to the dampening of sentiments by the fall of FTX and Celsius. Even bigger players like Coinbase had to take the brunt of the market slowdown, as shown by the chart down below.
However, Celsius’s reorganisation may serve as a model for similar collapses in the future. It demonstrates that there is a method for problematic platforms to pay back to their consumers by returning money in cash, cryptocurrency, and even company shares.
Since other businesses and investors are keeping a close eye on it, the platform’s initiatives could serve as a model for dealing with cryptocurrency failures in the future.
