The assets will be sent to a designated Celsius wallet, and will await court orders about how they should be distributed.

Crypto custodian Prime Trust agreed to return roughly $17 million in tokens to crypto lender Celsius Network in a bankruptcy court hearing on Thursday.

Celsius had sued Prime Trust in August, alleging that Prime Trust had improperly withheld the tokens when the two terminated their contract in June 2021. The assets, made up of 398 BTC, 196,268 CEL tokens, 3,740 ETH and 2.2 million USDC valued at roughly $17 million, were tied to Celsius’ yield product customers in Washington State and New York. Prime Trust held $119 million of Celsius’ assets at the time the contract was ended.

Celsius filed for Chapter 11 bankruptcy protection in July. The assets will be sent to a designated Celsius wallet, Prime Trust said Thursday. Next come orders from the court about how the money should be distributed.

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Celsius currently owns 11 forms of stablecoins totalling approximately $23 million, according to disclosures.

Crypto lending firm Celsius Network, which is currently in Chapter 11 bankruptcy proceedings, has asked the court for authorization to sell its stablecoin holdings in order to generate liquidity to help fund its operations, according to new court filings.

Celsius filed for bankruptcy in July, and is currently before the U.S. Bankruptcy Court for the Southern District of New York, which is also hearing Three Arrows Capital’s bankruptcy case.

If this motion is approved by presiding Judge Martin Glenn, the Chief U.S. bankruptcy judge, the proceedings of the sale would go to primarily pay for the operations of Celsius Network. While the proceeds generated by the sale of the stablecoins constitute property of the Debtors’ estate, paying them back is part of a separate and ongoing process.

“The Debtors, however, continue to own stablecoins that should be monetized to fund their operations in these Chapter 11 cases given their market stability compared to other types of cryptocurrencies,” the filing reads.

Celsius’ official committee of unsecured creditors made a deal with the U.S. Trustee’s office earlier in September to appoint an independent examiner, provided they took certain steps to limit the amount of time and funding the examiner would take. Celsius agreed to join the examiner, and the judge signed off on the deal on Wednesday.

A hearing is scheduled for Oct. 6 in New York to discuss the proposed stablecoin sale.

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The Federal Trade Commission also requested a copy of all relevant documents.

The Federal Trade Commission wants to get involved with failed crypto lender Celsius Network’s bankruptcy case.

On Tuesday, two lawyers with the business regulator, Katherine Johnson and Katherine Aizpuru, asked the judge overseeing Celsius’ proceedings for permission to represent the FTC. She also requested a copy of all relevant documents. The requests had not been granted by press time.

The FTC declined to comment. The short-on-specifics filings don’t shed any light on FTC’s intent in the Celsius case.

The regulator has joined previous bankruptcy cases however. In 2015 the agency made a motion tied to RadioShack’s bankruptcy proceedings to limit how much customer information – such as names and purchase histories – could be shared or sold.

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Celsius Mining said in March that it intended to go public.

Celsius Network’s mining unit, which said in March it planned to go public, filed for Chapter 11 bankruptcy protection, along with its parent company, in the U.S. Bankruptcy Court for the Southern District of New York.

The mining unit of the troubled lender said in March it had filed a confidential S-1 draft registration with the U.S. Securities and Exchange Commission (SEC), to take the company public. At the time shares of most publicly traded crypto mining companies were tumbling, with the broader market selloff.

Fast forward to summer, with the continued bear market, miners were forced to sell their mined bitcoins to pay for their operating costs and some industry participants expected lot of miners to turn to M&A to survive the down turn as some faced debt crisis. Celsius Mining’s bankruptcy filing is likely to be another blow to investor sentiment in the mining sector.

Celsius Mining’s IPO process wasn’t a successful option as investors couldn’t get past the possibility of litigation risk while the parent company paused customer withdrawals and faced bankruptcy, according to a person familiar with the mining unit’s IPO process.

The unit also faced similar investor sentiment while seeking potential “rescue financing” which would bail out the miner, if the IPO fell apart, according to the person, who didn’t want to be identified.

Celsius Mining has been active in the industry via investing and lending as well as helping host the miners to which it lends. In March, bitcoin (BTC) miner Mawson (MIGI) signed a 100-megawatt co-location and $20 million debt deal with Celsius Mining.

Last year Celsius Mining said it invested a total of $500 million for its bitcoin mining operations in North America.

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