Celsius drafts a plan to unstake Ethereum
Celsius is going through a crisis amid bankruptcy. Increasing liquidity is one approach to meeting creditors’ demands. As a result, the company has devised a strategy to sell a significant chunk of its ETH and raise funds to pay off the debt. The plan implies unstaking Ethereum tokens valued at around $470 million.
While it is unclear if unstaking would be done in a phased manner, it is evident that ETH is only one of the assets the crypto venture is looking to liquidate.
The decision to do the same came after Celsius faced bankruptcy. The downfall is said to have been triggered by allegations of mismanagement and the arrest of Alex Mashinsky, the founder of Celsius. Alex has been reportedly accused of committing fraud.
Staking an asset is part of a company’s strategy to earn rewards by backing the network and its operations. Rewards are then shared with community members. Unstaking is precisely what it sounds like. Companies withdraw their support, seek an addition to their liquidity with funds, and utilize that to settle debt, if any, or use the funds for any other purpose they want to.
Celsius has addressed the development on X. The company has said that unstaking ETH holdings is part of offsetting costs that it has incurred during the restructuring of the company.
Distributions to creditors will be in ETH or BTC, as outlined in the plan that members approve. The community has responded pretty negatively to this development. Most have been waiting to receive their funds for over a year. They have, right now, said that the date is what they are looking for, not just words. Many members have also said there has not been any personal communication for redistribution yet.
Unstaking the token is alternatively considered something positive for ETH. Many believe that it will come with long-term advantages for the token.
It likely means that the token will fetch profits for holders in the future. Celsius is planning to unstake 206,319 ETH. It will then meet the obligations of creditors and navigate its way around bankruptcy.
Two things that crypto companies constantly try to fight are hack attempts and bankruptcy. The latter has hit Celsius, and a further course of action is yet to be shared. ETH is being traded at $2,226.11, a slip of 0.55% in the last 24 hours. Ethereum has been dancing to lower tunes for the last 30 days, as the value is down by 5.45% for the period.
Celsius announced the move to file voluntary petitions for Chapter 11 protection on July 14, 2022. Further adding that the process to restructure the company financially had been initiated. Celsius, since then, has been trying to stabilize the business and maximize value for shareholders.
