Creditors Want to Pour Cold Water on Celsius’ Mined Bitcoin Sale Plans

Celsius creditors want to block the bankrupt crypto lender from selling mined bitcoin (BTC) reserves – and have labeled the firm’s CEO previous attempts to reassure them as “empty and false.”

The company is filing for bankruptcy in New York, where the case is now being heard. But in a letter to the court, the creditors’ lawyers wrote that the plan to sell mined tokens had “not [been] described in any depth.”

While the creditors did not claim that they were totally opposed to the idea of a sale, they claimed that they needed more information about the nature of the sale – and how the funds from the sale would be used.

They called for “boundaries and transparency” from Celsius and asked the court to “condition its approval” of the proposed sale.

Celsius’ own filings to the court explained that the company’s mining subsidiary (which filed for bankruptcy the day after its parent company) owns more than 80,500 mining rigs, which are worth some USD 750m.

The subsidiary, Celsius Mining, had sought approval for a public listing on the stock market in May, and had announced plans to mine over BTC 10,000 by the end of this year. In April, the firm reported owning over BTC 151,000 (USD 3.6bn at current prices).

Last month, Pat Nash, Celsius’ lead attorney, asked the creditors to stay their hand and take a long-term view. He urged them to wait for market prices to recover as Celsius Mining was already minting BTC 14.2 per day and was hoping to scale up its operations.

Since then, the firm has changed its tune and asked the court to let it convert its BTC to fiat to help it pay its obligations.

The levels of distrust for Celsius and its CEO Alex Mashinsky were even more palpable in a separate statement to the court from creditors this week. They denounced as “empty and false promises” (since deleted) comments made by Mashinsky just five days before the company took the decision to freeze its customer assets.

In the statement, the creditors complained that while Celsius had “previously championed its transparency,” it “largely went silent” after its decision to freeze assets.

The creditors wrote that they were “committed to thoroughly investigating Celsius, including potential misconduct by Celsius and its insiders,” and would pursue a “resolution that will maximize Celsius’ value for the benefit of its account holders and unsecured creditors.”

Meanwhile, the US Department of Justice has also demanded more court oversight of Celsius’ plans to make USD 409,000 severance payments to 19 employees and to sell BTC during its bankruptcy, Reuters reported. 

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