Where Will Celsius Assets Go? Core Scientific May Have the Answer

As Celsius contemplates an asset sale at an upcoming hearing, Texas-based crypto miner Core Scientific has asked the company to pay its outstanding bills.

Core Scientific has asked a bankruptcy court to compel Celsius to pay all outstanding electricity costs and allow Core to terminate an agreement between the two companies.

Too hot at Celsius core?

Core Scientific provides bankrupt crypto lender Celsius with hosting services. Under the agreement, the machines belong to Celsius, and Celsius benefits from any crypto mining.

Celsius had earlier filed a contempt motion against Core Scientific for allegedly breaching the terms of an agreement.

According to Celsius, Core didn’t say in the agreement that it would pass on rising electricity costs to the troubled lender, which Core denies, citing evidence in the contract. Core also denies Celsius’ claims that it delayed deploying Celsius machines and had failed to offer Celsius additional hosting capacity in breach of the agreement.

Core claims that Celsius is trying to have the contract rewritten in the context of its recent bankruptcy filing. It maintains that a debtor should not receive special treatment that absolves it from an earlier agreement. Accordingly, it debunked a case Celsius used to argue this point.

In conclusion, it has asked the court to compel Celsius to pay electricity bills from Aug. 2022 and Sep. 2022, amounting to $2,104,683.28.

Core Scientific’s filing comes as the company’s margins get squeezed by falling asset prices. In June 2022, it sold 7,202 bitcoins.

Celsius asset hearing imminent

Celsius filed for Chapter 11 bankruptcy in July 2022. Since then, the company had faced tough questions about mass withdrawals by senior executives before it paused withdrawals in June 2022. It had also received flack from investors that lost big when the company’s gambit of highly-leveraged lending unwound.

The filing from Core comes as Celsius’s bankruptcy hearing is in full swing. On Oct. 21, 2022, the company announced that it had progressed on essential issues. These include bidding processes if the company’s assets go on sale, cash management, and choosing a fee examiner to monitor the fees of professional service providers involved in the bankruptcy proceedings. The next sitting will take place on Nov. 1, 2022. An earlier court filing revealed that this hearing would be a sale hearing.

Celsius received good news yesterday. Crypto custodian Prime Trust will transfer $17 million in digital currency after the companies’ contract ended in June 2022. The crypto assets will be held in a Celsius wallet separate from other assets until the court decides how to disburse the funds. 

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