Tag: Celsius Network

SEC Raises Objections to Celsius Network’s Restructuring Plan Involving Coinbase

by Blockchain News

Key Takeaways

SEC files limited objection against Celsius Network’s restructuring plan.

Concerns raised over the company’s proposed engagement with Coinbase.

SEC’s ongoing lawsuit against Coinbase cited as complicating factor.

Next bankruptcy court hearing scheduled for October 5, 2023.

Background and Timeline

Celsius Network filed for Chapter 11 bankruptcy after announcing a $14 million agreement with Core Scientific, a mining company. Since filing for bankruptcy in July 2022, Celsius has reportedly failed to meet its payment obligations to Core Scientific. The restructuring plan has undergone several amendments since its initial filing in March 2023, with the fourth iteration submitted in August 2023. The bankruptcy court has yet to approve the plan, and the next hearing is scheduled for October 5, 2023.

SEC’s Concerns

The SEC’s limited objection focuses on Celsius Network’s proposed engagement with Coinbase, which is intended to act as a Distribution Agent for international customers under the restructuring plan. The SEC argues that the role of Coinbase in the arrangement “goes far beyond the services of a distribution agent,” potentially implicating brokerage and master trading services. These services are central to the SEC’s ongoing lawsuit against Coinbase, initiated in June 2023. The SEC has reserved the right to object further based on the outcome of this and other related cases.

Coinbase’s Response

Coinbase CEO Brian Armstrong and Chief Legal Officer Paul Grewal took to social media to express their support for Celsius Network. They questioned why the SEC would object to a “trusted US public company” taking on the role of distributing assets back to Celsius customers. The statement raises questions about the SEC’s motives and adds another dimension to the ongoing legal complexities.

Implications and Next Steps

The SEC’s objection could potentially delay or alter the terms of Celsius Network’s restructuring plan. It also raises questions about the regulatory landscape for crypto companies engaging with traditional financial institutions. The bankruptcy proceeding is set to continue, with the next hearing scheduled for October 5, 2023. The SEC reserves the right to object further based on the outcome of this and other related cases.

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Celsius Creditors Seek Help from Bankruptcy Judge to Uncover Potential Market Manipulation

by Blockchain News

Creditors of Celsius Network have requested the help of a bankruptcy judge to investigate potential market manipulation of Celsius’ CEL token. The creditors, represented by a committee, are seeking information from cryptocurrency exchange FTX regarding users associated with 10 wallets that were allegedly involved in suspicious trades of the CEL coin between April and August 2022. The creditors suspect that the trades may have artificially inflated the price of the CEL token and want to determine if they were legitimate or constituted market manipulation, such as wash trading.

To identify the suspicious transactions, the committee employed the services of blockchain consultant Elementus. According to Elementus, 947 transactions involving a near one-to-one relationship of CEL token deposits and withdrawals occurred over three-day periods between 10 private wallets and 10 FTX-operated wallets. The committee believes that the information from FTX will be crucial in determining whether the trades were intended to inflate the price of CEL token artificially.

In addition to uncovering potential market manipulation, the committee is also requesting information regarding any short positions taken on CEL. The committee believes that short positions could have had a negative impact on the price of the CEL token, and that this information could also be critical in resolving a dispute related to Celsius’ bankruptcy.

The creditors are seeking permission from the bankruptcy judge to issue subpoenas to FTX to obtain the requested information. The request for subpoenas was made in court papers filed on April 26. The information obtained from FTX could be important in resolving disputes related to Celsius’ bankruptcy.

Meanwhile, FTX is pending approval from the United States Bankruptcy Court for the District of Delaware to sell LedgerX, its futures and options exchange and clearinghouse, to an affiliate of Miami International Holdings for approximately $50 million. The sale is expected to provide FTX with the funds needed to pay back its creditors. A hearing to approve the sale is scheduled for May 4.

In conclusion, the Celsius creditors’ request for subpoenas to FTX reflects their efforts to investigate potential market manipulation of the CEL token. The information obtained from FTX could be crucial in determining whether the trades involving CEL were legitimate or constituted market manipulation, and could be important in resolving disputes related to Celsius’ bankruptcy. Meanwhile, FTX’s pending sale of LedgerX is expected to provide the exchange with the funds needed to pay back its creditors.

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Celsius Network Considers Legal Action Against Crypto Blogger

by Blockchain News

Celsius Network, a crypto lending platform, has been considering legal action against Tiffany Fong, a crypto blogger and Celsius creditor, for sharing leaked internal information regarding the company’s bankruptcy case. Fong, who has roughly $119,000 worth of crypto assets locked on Celsius, has been reporting on the bankruptcy case via YouTube and other social media platforms since the firm paused withdrawals in mid-June 2022 and filed for Chapter 11 bankruptcy the following month.

According to a recent court filing, Celsius’ legal counsel, Kirkland & Ellis International, has been working on the case for Fong since January 26, 2023. The filing shows that the law firm had worked 77 billable hours worth roughly $72,000 on an invoice titled “Tiffany Fong litigation” as of April 14, 2023. While no concrete legal action has been formulated yet, the filing suggests that Celsius’ legal counsel has been looking into the leaked information Fong reported on via her social media accounts.

Fong claims that she received the leaked information privately from disgruntled former Celsius employees, and has reported on various internal details, such as company bids on Celsius assets, alleged audio of private company discussions, and alleged transaction activity of executives such as former CEO and founder Alex Mashinsky.

In the filing, Celsius’ law firm also outlined that it was drafting cease and desist letters for Fong and a motion to compel, which generally asks courts to enforce a request for information relevant to a case. While Fong maintains that she has not done anything illegal, Celsius Network is seeking to prevent further dissemination of internal information related to its bankruptcy proceedings.

Fong’s attendance at the 2023 NYC NFT event has added fuel to the fire. In a Twitter post on April 15, she revealed that she had found Alex Mashinsky and his wife, Krissy Mashinsky, in public and approached them. A video posted to Twitter also shows the Mashinsky couple hurriedly walking away as other crypto content creators, such as BitBoy Crypto, approach alongside Fong in an attempt to engage them in conversation.

Celsius Network’s bankruptcy case is ongoing, with the company’s legal counsel actively pursuing action against Fong for leaking internal information. The case highlights the potential legal consequences of sharing confidential information regarding a company’s bankruptcy proceedings, even if the information is provided by former employees.

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Celsius Network to File Disclosure Statement for Restructuring Plan

by Blockchain News

Bankrupt crypto lender Celsius Network has announced it will be moving forward on its Chapter 11 restructuring plan with a disclosure statement containing information for claim holders. The statement is set to be filed on April 12, providing adequate information for claim holders to vote on the proposed restructuring plan sponsored by NovaWulf.

Celsius first presented the plan in February, which proposed creating a public platform fully owned by Earn creditors called NewCo. The committee of unsecured creditors will appoint the majority of the firm’s board members, with no Celsius founder involvement or relationship. The goal of this plan is to ensure a fair restructuring process that prioritizes the interests of creditors and other stakeholders.

The debtors’ statement regarding the plan reveals that the April 12 filing will include details of events leading up to Celsius’ bankruptcy, projected recoveries for certain stakeholders should the restructuring plan be approved, and answers to frequently asked questions. The bankruptcy court is expected to conduct a hearing regarding approval of the disclosure statement on May 17, with a vote on the plan to follow.

Since filing for Chapter 11 in July 2022, Celsius’ bankruptcy proceedings in court have included discussions on assets from the firm’s Earn program, crypto holdings, Bitmain coupons, and personal information of its users. In March, the bankruptcy judge approved a settlement plan allowing Celsius custody account holders to get back 72.5% of their crypto.

Celsius Network is a crypto lending platform that enables users to earn interest on their crypto assets or borrow funds against them. The company was founded in 2017 by Alex Mashinsky, an entrepreneur and inventor known for his contributions to the Voice Over Internet Protocol (VoIP) industry. Celsius gained popularity among crypto investors due to its high interest rates and low fees.

However, the company faced financial difficulties in 2021 as the crypto market experienced a sharp downturn. In July 2022, Celsius filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York. The company cited a range of factors, including market volatility, regulatory scrutiny, and liquidity issues.

As part of its bankruptcy proceedings, Celsius has been exploring various restructuring options to address its financial challenges. The proposed plan sponsored by NovaWulf is one such option that seeks to create a fair and transparent process for creditors and other stakeholders.

In summary, the disclosure statement that Celsius Network plans to file on April 12 is a significant step forward in its Chapter 11 bankruptcy proceedings. The statement will provide claim holders with vital information about the proposed restructuring plan, including projected recoveries and details of the events leading up to Celsius’ bankruptcy. The restructuring plan, which aims to create a public platform fully owned by Earn creditors, is a key part of Celsius’ efforts to emerge from bankruptcy and restore its financial health.

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Celsius Network Announces Disclosure Statement for Chapter 11 Plan

by Blockchain News

In a court filing on March 31, Celsius Network revealed that it plans to file a disclosure statement on April 12, containing details about the events that led to its bankruptcy, projected recoveries for certain stakeholders, and answers to frequently asked questions. This is part of its Chapter 11 restructuring plan, which was proposed in February and aims to create a public platform called NewCo that is fully owned by Earn creditors. The restructuring plan is sponsored by NovaWulf, and the committee of unsecured creditors will appoint the majority of the firm’s board members, with no involvement from Celsius founder.

The bankruptcy court is expected to hold a hearing regarding approval of the disclosure statement on May 17, with a vote on the plan to follow. If approved, the restructuring plan would allow Earn creditors to take full ownership of NewCo and appoint a majority of the board members. This would result in no involvement or relationship with the Celsius founder.

Since filing for Chapter 11 in July 2022, Celsius Network’s bankruptcy proceedings in court have included discussions on assets from the firm’s Earn program, crypto holdings, Bitmain coupons, and personal information of its users. In March, the bankruptcy judge approved a settlement plan allowing Celsius custody account holders to receive back 72.5% of their crypto.

Celsius Network was founded in 2017 as a peer-to-peer lending platform for cryptocurrency. The company’s main product, the Earn program, allows users to earn interest on their cryptocurrency holdings. The platform has gained popularity in recent years, with over 1 million users and more than $25 billion in assets under management.

The company filed for Chapter 11 bankruptcy in July 2022, citing liquidity issues and regulatory pressures. Since then, the company has been working on a restructuring plan to address its financial difficulties and ensure the protection of its users’ assets.

The proposed restructuring plan, sponsored by NovaWulf, aims to create a public platform called NewCo that is fully owned by Earn creditors. This would allow users to have more control over the platform and its operations, with no involvement or relationship with the Celsius founder.

The upcoming disclosure statement, to be filed on April 12, will provide claim holders with more information about the restructuring plan and its potential impact on their assets. The statement will also provide answers to frequently asked questions and include details of events leading up to Celsius’ bankruptcy.

The bankruptcy court is expected to conduct a hearing regarding approval of the disclosure statement on May 17, with a vote on the plan to follow. If the plan is approved, it could be a positive step for Celsius Network and its users, providing a path forward for the company to address its financial difficulties and regain stability.

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Crypto Lender Celsius to Proceed with Chapter 11 Restructuring Plan

by Blockchain News

In a bid to restructure and move forward with its operations, Celsius Network has announced that it will proceed with its Chapter 11 plan. The plan is designed to provide the crypto lender with a path to financial stability after facing bankruptcy. Celsius has stated that it will file a disclosure statement on April 12, containing information that will be used by claim holders to vote on the proposed restructuring plan.

The Chapter 11 restructuring plan is aimed at ensuring that the crypto lender can operate in a financially sustainable manner while also addressing the concerns of its creditors. NovaWulf, a company that invests in distressed assets, has sponsored the proposed restructuring plan.

According to a court filing made on March 31 in the United States Bankruptcy Court for the Southern District of New York, the disclosure statement aims to provide “adequate information” to claim holders to allow them to vote on the proposed restructuring plan. The statement is expected to contain a detailed analysis of Celsius Network’s operations, finances, and proposed plan for restructuring.

Celsius Network’s bankruptcy has been a significant event in the crypto world, as it was one of the first major crypto lenders to face financial difficulties. The company had attracted significant attention in the crypto community due to its high interest rates on deposits and loans. However, the bankruptcy has raised concerns about the sustainability of the business model and the risks involved in crypto lending.

The Chapter 11 restructuring plan represents a significant step forward for Celsius Network and the crypto lending industry as a whole. If successful, the plan could provide a roadmap for other struggling crypto lenders to follow. However, the success of the plan is far from guaranteed, and there are still significant risks involved in the crypto lending space.

As this is a developing story, more information about Celsius Network’s restructuring plan and its impact on the crypto lending industry is expected to emerge in the coming days and weeks.

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JPMorgan Hires Former Celsius Network Executive Aaron Iovine As Crypto Regulatory Policy Head

by Blockchain News

JPMorgan Chase & Co. on Wednesday announced the appointment of former Celsius Network executive Aaron Iovine as its new head of digital assets regulatory policy, a newly created job position as confirmed by a JPMorgan spokeswoman.

Mr. Iovine, who is the former head of policy and regulation for the bankrupt crypto lending platform Celsius Network Ltd., will help JPMorgan navigate regulatory affairs for digital asset trading matters.

Iovine will work with JPMorgan’s regulatory affairs group headed by Sharon Yang, who in the past served as a deputy assistant secretary for international financial markets at the Treasury Department.

Celsius hired Iovine in February this year from Cross River Bank, a digital asset-friendly regional lender. Upon Iovine’s departure, Celsius recently hired Benjamin Melnicki from Robinhood Markets Inc. as its head of cryptocurrency compliance and regulation.

Iovine, who is an experienced attorney, spent almost three years at Cross River, where he led policy and regulatory affairs, according to his LinkedIn profile. He left Celsius in September, two months after the crypto-lending platform filed for bankruptcy in New York.

The announcement comes less than a month after the chairman and CEO of JPMorgan Chase Jamie Dimon told lawmakers that cryptocurrencies are “decentralized Ponzi schemes.”

In congressional testimony on September 22, Dimon referred to himself as “a major skeptic” on cryptocurrencies like Bitcoin. Despite his hate for cryptocurrencies, the CEO embraces DeFi and blockchain as real and novel technologies that can be applied in both private and public sectors.

The hiring reflects the company’s commitment to compliance, as well as its recognition that firms require seasoned teams to deal with cryptocurrency regulatory issues. Regulators are increasing their scrutiny of the digital asset sector following the rising popularity of cryptocurrency trading activities. This has led some companies in the industry to pay closer attention to their compliance procedures.

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Celsius Network Charged Over $3M in Legal Fees

by Blockchain News

Beleaguered crypto lending platform Celsius Network has incurred more than $3 million in legal fees, according to a filing shared on Friday. 

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The bankruptcy proceedings, which have been costly for Celsius Network, is an understatement, and per the filing, law firm Kirkland and Ellis is charging the company the sum of $2.6 million in fees for representing it in its bankruptcy proceedings from July 13 and July 31.

The company was also charged the sum of $750,000 in fees by Akin Gump for its services between July 13 and August 31.

These massive legal fees give a peak into the costs being incurred by crypto companies that have gone bankrupt, including Voyager Digital, Babel Finance, Vauld Group, and Zipmex. While the industry is filled with these bankruptcy cases, Celsius Network stands out as it was the first firm to halt withdrawals on its platform.

Alex Mashinsky, the company’s founder and former CEO, and his team allegedly ran the company to bankruptcy, with the Wall Street Journal noting that the firm operated a higher risk profile than most traditional banks did. 

At present, Celsius Network has been exploring avenues to repay its creditors following its bankruptcy with as many as $2.8 billion in crypto liabilities. For the company to have an amicable settlement where the restructuring or liquidation is favourable to the majority of its creditors, it will still need to incur the services of experts that can help navigate its restructuring process.

As a flagship bankrupt crypto lending firm, the company is neck deep in its proceedings, and according to reports, it may suffer as much as a $40 million deficit according to projections by Kirkland & Ellis. 

The crypto winter has taken out many crypto giants, and what proponents in the space are now looking for now is how the affected companies will bankroll their bankruptcy proceedings with highly cushioned funds.

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Celsius Network Shares Details of Its Creditor as it Raises Cyber Threat Concerns

by Blockchain News

Bankrupt cryptocurrency company Celsius Network has disclosed the information of its creditors in a filing recently provided in court, including names, addresses, the amount owed, and email addresses amongst others.

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This is in continuation of the court proceedings after the crypto firm filed for Chapter 11 bankruptcy in the US.

This step was not taken in isolation however, it is in fact a requirement of the law to ensure transparency in handling the debts owed by the firm.

The filing includes more than 14,000 pages of documents, including the details of hundreds of thousands of creditors of the crypto firm.

While several concerns have been raised by the crypto community on the adverse effect that this move by Celsius will have on its creditors, making them vulnerable to cyber threats, the bankruptcy judge in charge of the Chapter 11 proceedings, Martin Glenn has ordered that the physical addresses of the creditors be redacted, but other information should remain.

This is after the legal counsel representing Celsius had presented an appeal before the court requesting for the redaction of names to protect its creditors from being prone to cyber-attacks. 

The filing also revealed that the former CEO, Alex Mashinsky had withdrawn approximately $10 million from the network before the crash. 

His spokesperson stated that the withdrawal was preplanned and was used to settle tax bills. This however has raised questions and concerns about the involvement of the former CEO in the crash of the Celsius platform.

Added to this, the filing also revealed that other executives of the crypto firm had withdrawn crypto assets worth approximately $8 million.

The spokesperson for the former CEO however noted that the crypto investment of Alex Mashinsky to the tune of $44 million remains frozen on the platform.

Celsius Network filed for Chapter 11 of the Southern District of New York Bankruptcy Court in July because of the prolonged crypto winter and how it has adversely affected the business. The crypto firm, however, promised that all its creditors of about 1.4 million users will be duly compensated for their investment and there won’t be any cause for alarm.

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