Celsius Gets Clearance From Court to Sell Newly Mined Bitcoin Despite DOJ Objection

A New York judge has allowed crypto lender Celsius Network to mine and sell Bitcoin during its bankruptcy despite opposition from unsecured creditors. The troubled lender, which revealed on Monday that it was running low on money, also disclosed that it received several proposals for cash injection without naming parties they’d received such proposals from. Lawyers representing the exchange also claim that Celsius aims to invest in increasing its crypto mining operation as a way to expand itself out of trouble.

As per a Reuters report, Celsius amended its proposal to specify that proceeds of sales of Bitcoins generated by its mining rigs will be kept separate from the company’s cash management system, satisfying the creditors, many of whom are individual investors whose assets are tied up in the bankruptcy.

Before approving the motion, Judge Martin Glenn expressed concern that the mining business is not profitable, and Shara Cornell, the US Trustee representing the Department of Justice’ interests, objected to the motion arguing that there is not enough clarity on the operation to approve it.

That said, Celsius remains blocked from selling equity or debt investments in other crypto companies until it provides more information about the assets it plans to sell, the judge stated.

Estimates filed by law firm Kirkland & Ellis on August 14 reveal that the lender could run out of funds by October. The firm also owes depositors a sum which is $2.8 billion (roughly Rs. 22,200 crore) more in crypto than the firm’s current holdings.

Celsius filed for Chapter 11 bankruptcy last month after the crypto crash forced it to stop withdrawals.

The projections by the law firm, however, have revealed that as of August, the firm still has about $130 million (roughly Rs. 1,000 crore) in cash balance but that would run out by October.

Considering all expenses like operating, capital and restructuring spendings, Kirkland & Ellis still predicts that the firm will be nearly $40 million (INR value) in the red by the end of October.

The law firm disclosed a considerable imbalance between asset holdings and liabilities in the filing, and that accounted for a $2.8 billion hole in crypto liabilities. As of now, the firm holds $348 million (roughly Rs. 2,800 crore) in BTC on hand, with $2.5 billion (roughly Rs. 19,800 crore) in BTC liabilities.

The firm also found a $1 billion (roughly Rs. 100 crore) spread between ETH liabilities and ETH on hand, and a little less than $700 million (roughly Rs.5,600 crore) gap in USDC liabilities. On top of that, Celsius also has a gap of $625 million (roughly Rs. 4,900 crore) in other crypto tokens.

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