Borrowers cannot withdraw their collateral since Celsius stopped withdrawals in June before filing for bankruptcy.
The sharp drop in cryptocurrency prices caused a liquidity crisis in the industry, forcing the now-bankrupt cryptocurrency lender Celsius to file for bankruptcy in July.
The now-bankrupt cryptocurrency lender Celsius, which earlier in the year managed assets worth about $12 billion, was compelled to file for bankruptcy in July as a result of the sharp decline in cryptocurrency prices, which resulted in a lack of liquidity across the industry. The narrative, however, doesn't end there because many of Celsius' clientele fell victim to the company's deception by accepting the incorrect justification.
According to bankruptcy records, even after borrowers had repaid their debts, Celsius neglected to return collateral to them. It is alleged that thousands of loan holders had more than $812 million in collateral held on the platform.
The owner of the Phunware company in Texas, Knitowski, said that everything they did was improper. My CFO and I would be charged right away if we did anything that even remotely resembled this.
The bankruptcy process is currently being navigated by creditors in an effort to recover at least some of the money that is owing to them.
They had cause to be somewhat optimistic about the future after Celsius announced on Friday that it was selling the asset custody platform known as GK8 to Galaxy Digital.
Money from the purchase must go toward paying legal bills, according to David Adler, a bankruptcy attorney at McCarter & English who represents Celsius creditors.
Celsius creditors are represented by attorney David Adler. After then, there might still be money available for former customers.
The most crucial query, in Adler's opinion, is who actually is entitled to the money that they receive from GK8. According to Adler, he is the agent for a group of 75 borrowers who have a total value of about $100,000,000 in digital assets on Celsius's platform.
The death of FTX a month ago was the most recent occurrence of this theme in the cryptocurrency sector, which has occurred more than once.
Sam Bankman-Fried, the exchange's founder and former CEO, informed his followers on Twitter that all of the business's assets were in order. Just the day following, he was in the midst of a liquidity crisis and searching for a rescue plan.
