BTC mined

Celsius has received approval from the New York bankruptcy judge to sell their mined BTC as part of their mining ventures to continue to maintain operations.

Celsius’ chapter 11 bankruptcy proceedings

Celsius receives approval to sell BTC that they mined as part of the mining wing of their company. Chapter 11 is a form of bankruptcy that involves the reorganisation of a debtor’s assets and liabilities, with the goal of ameliorating the damage caused as much as is possible.

If a company files for chapter 11 bankruptcy proceedings, then it must do so in the interest of creditors. Many companies throughout history have used chapter 11 bankruptcy to reorganise their assets and continue their operations without shutting down the business.

General Motors and K-Mart have both declared chapter 11 bankruptcy before in an effort to sustain operations, but it appears as though Celsius will not able to continue their operations so easily.

Celsius’ disastrous mining initiative

Celsius’ foray into the mining industry was touted as a huge win when it was first announced by Mashinsky on his weekly AMAs (Ask Mashinsky Anything).

However, it seems that they launched their mining venture at the worst possible time, and since then the mining industry has suffered an extreme bear market.

In fact, Celsius’ mining venture was one of the clues that the company was facing severe problems, as they attempted to take the company public at the worst possible time for mining companies – a move that was called out by Swan Bitcoin CEO Cory Klippsten.

The mining venture was actually one of the reasons that Celsius suffered from their insolvency in the first place: by investing so heavily (with the goal of becoming the largest miner in North America) with customer funds, their assets weren’t liquid and they weren’t able to meet with customers’ withdrawal expectations.

Will Celsius depositors get their money back?

The bankruptcy proceedings have been filed with the expressed intention of protecting the Celsius community from any more damage, but it seems that most of the damage has already been done.

It is now clear that Celsius depositors will not receive all of their funds back, and the amount that they will receive back could well be dwindling by the day.

Those who are overseeing the bankruptcy proceedings have to contend with the wishes of Celsius’ creditors as well as the wishes of the Celsius community.

However, most importantly, they are focused on looking after themselves.  Lawyers and administrators throughout this process will be extremely costly, especially given the fact that Celsius has successfully managed to gamble away billions of dollars in client funds.

CEO Alex Mashinsky continues to dump on the community

As a testament to Mashinsky’s demagoguery, the community continued to rally in support of the project even when it was clear that the case was totally hopeless.

The attempted CEL short squeeze was aimed to replicate some of the successes of the Gamestop short squeeze, during which Wall Street was famously bearish on the stock and a lot of retail traders managed to outcompete them and make the short sellers become forced buyers as they were liquidated out of their positions.

However, Mashinsky used the opportunity to dump on his community.  He and his wife (both wallets are publicly known) have taken the chance to sell their CEL tokens for 10x more than they would have been worth before the short squeeze, which many CEL holders (and engineers of the short squeeze) view as a betrayal.

The news that they have been granted the permission to sell some of the BTC they mined in order to continue with the cost of operations is not promising news for holders. This is particularly intolerable from the perspective of the Celsius community at large, who are already feeling disenfranchised that former employees remain on the payroll.

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