Bhutan Sovereign Investment Fund Invests Millions in Crypto

The Kingdom of Bhutan’s sovereign investment arm, Druk Holding and Investments (DHI), has quietly built up a crypto portfolio worth millions of dollars without disclosing it to the public. DHI is a commercial arm of the royal government of Bhutan and is estimated to manage around $2.9 billion in assets.

According to a report released by Forbes, DHI’s crypto investments were brought to light following the crypto contagion in 2022 when companies like Celsius and BlockFi filed for bankruptcy. A Celsius filing showed that DHI withdrew over $65 million and deposited almost $18 million in crypto.

BlockFi lawyers filed a complaint against DHI to reclaim outstanding assets, alleging that the fund defaulted on its $30 million loan in March. BlockFi claimed that DHI refused to repay the loan in full after liquidating the 1,888 Bitcoin (BTC) collateral, worth $76.5 million at the time.

DHI CEO Ujjwal Deep Dahal said in a statement to Forbes that the issue with BlockFi is confidential and highlighted that the “matter with BlockFi has been settled.” However, the exact terms of the settlement were not disclosed.

Celsius and BlockFi were two of the most prominent bankruptcy filings within the crypto space in 2022. On July 14, crypto lending platform Celsius filed for Chapter 11 reorganization, also known as a bankruptcy filing. Since then, the embattled crypto lender has been dealing with bankruptcy proceedings and is working on a restructuring plan. On Nov. 28, BlockFi also filed for bankruptcy after being affected by the infamous collapse of the FTX exchange.

Bhutan is a small landlocked country in South Asia, located in the eastern Himalayas. The country is known for its Gross National Happiness index, which measures the well-being of its citizens instead of just economic growth. Bhutan has been gradually opening up to the world in recent years, with a focus on sustainable development and environmentally friendly policies.

The news of Bhutan’s crypto investments is a reminder of the increasing interest in cryptocurrencies among governments and institutional investors. While many countries have been skeptical of cryptocurrencies and have implemented strict regulations, others have embraced them as a way to diversify their portfolios and hedge against inflation.

In recent years, countries like China, Russia, and Iran have explored the use of cryptocurrencies for international trade, while other countries like El Salvador and Ukraine have adopted Bitcoin as legal tender. The growing interest in cryptocurrencies from governments and institutional investors is expected to continue in the coming years, as the crypto market matures and becomes more mainstream.

In conclusion, Bhutan’s sovereign investment fund’s decision to invest millions in cryptocurrencies highlights the increasing interest in digital assets among governments and institutional investors. While the exact size and composition of DHI’s crypto portfolio remain undisclosed, the news is a reminder of the growing importance of cryptocurrencies in the global financial system. As the crypto market continues to evolve and mature, it is likely that more countries and institutional investors will follow Bhutan’s lead and invest in digital assets.


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Crypto Firms Report Funds Tied Up with Shuttered Signature Bank

On March 12, New York regulators and the United States Federal Deposit Insurance Corporation shut down Signature Bank, a crypto-friendly bank that had reportedly become a systemic risk to the US economy. As news of the shutdown spread, several crypto firms came forward to report that they had funds tied up with the bank.

Coinbase, one of the largest crypto exchanges in the world, announced via Twitter that it had around $240 million in corporate funds at Signature Bank that it expected to be fully recovered. Stablecoin issuer and crypto firm Paxos also reported that it had $250 million held at the bank, but noted that it held private insurance that covered the amount not covered by the standard FDIC insurance of $250,000 per depositor.

Celsius, a crypto lender that recently filed for bankruptcy, reported that Signature Bank had held some of its funds, but did not disclose the amount. However, the Celsius Official Committee of Unsecured Creditors, which represents the interests of account holders, added that “all depositors will be made whole.”

As news of the shutdown and related crypto exposure spread, other firms in the crypto industry came forward to quell fears about their related exposures. Robbie Ferguson, co-founder of Web3 game development platform Immutable X, and Mitch Liu, co-founder of the media-focused Theta Network blockchain, both separately tweeted that their respective companies had no exposure to Signature. also reported in a tweet by CEO Kris Marszalek that it had no funds in the bank. Similarly, Paolo Ardoino, the chief technology officer of stablecoin firm Tether, tweeted that Tether had no exposure to Signature Bank.

While some firms expect to recover their funds in full, the closure of Signature Bank has raised concerns about the risks associated with the crypto industry. In addition to the shutdown of Signature Bank, the Federal Reserve announced that the FDIC had been approved to take actions to protect depositors at Silicon Valley Bank, a tech-startup-focused bank that had experienced liquidity issues due to a bank run that spread contagion to the crypto sector. The Fed also announced a $25 billion program to ensure ample liquidity for banks to cover the needs of their customers during times of turbulence.

Overall, the closure of Signature Bank highlights the challenges and risks associated with the rapidly growing and often unpredictable crypto industry. While some firms may be able to recover their funds, others may face significant losses, underscoring the need for greater regulatory oversight and risk management in the sector.


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Bankrupt crypto lender Celsius Network has chosen NovaWulf Digital Management as sponsor

The insolvent cryptocurrency lender Celsius Network has selected NovaWulf Digital Management as the sponsor for its proposed Chapter 11 restructuring plan. If the plan is successful, the investment advisory firm will assume operations of a new company, and the majority of customers are expected to recover up to 70 percent of their funds.

Celsius presented the proposal to the United States Bankruptcy Court for the Southern District of New York on February 15 as part of a filing. The Celsius Official Committee of Unsecured Creditors (UCC), which is an organization that represents the interests of Celsius account holders, has given its approval to the proposal that has been submitted.

The proposal calls for the establishment of a new public platform known as NewCo, which would be held in its entirety by Earn’s creditors. The UCC will be responsible for the appointment of the majority of NewCo’s board members. According to the idea, the reconstituted board will not have any “Celsius founding engagement or affiliation.”

In addition, NovaWulf will provide a direct financial contribution to the newly formed company in the range of $45 million to $55 million.

Celsius stated in the document that “the NovaWulf plan provides the best method to distribute the Debtors’ liquid crypto assets and maximize the value of the Debtors’ illiquid assets through a new company run by experienced asset managers.” This was in reference to the NovaWulf plan’s ability to distribute liquid assets and maximize the value of illiquid assets.

The illiquid assets, mining activity, and current loan portfolio of Celsius will all be moved into the new firm, which also has intentions to offer crypto-oriented services in the near future.

According to the proposal, creditors whose claims had a value of $5,000 or less as of the date of the petition will be placed in a “Convenience Class” and will be eligible to receive “a one-time distribution of liquid crypto.” This distribution will be paid in the form of Bitcoin (BTC), Ether (ETH), and USD Coin (USDC).

It is anticipated that the option will allow over 85% of Celsius’s clients to reclaim over 70% of the cryptocurrency that they have invested. It is possible for any Earn creditor with a debt more than $5,000 to choose to lower a claim to $5,000 in order to take part in the class.

Those who have claims worth more than $5,000, or those who have claims worth over $1,000 but choose not to participate in the Convenience Class shares, will be eligible to receive a payout of the cryptocurrency that is left over after smaller accounts have been compensated.

In addition to this, they will get ownership in NewCo in the form of equity and management share tokens, which will entitle its holders to collect dividends.

Earn users who hold Celsius (CEL) tokens, a native token used for user rewards that currently trades around $0.50, will have their tokens valued and purchased at the initial coin offering (ICO) price of $0.20. Earn users who do not hold Celsius (CEL) tokens will not have their tokens valued or purchased.

According to the proposal, “insider CEL token claims,” also known as the customers who were provided early access to the ICO, “would get no reimbursement.”

In addition, the proposal calls for the establishment of a “well-funded litigation trust” in order to take legal action against officials at Celsius, including the company’s previous CEO Alex Mashinsky.

Before the proposed strategy can be put into action, it must first have the blessing of the United States Bankruptcy Judge Martin Glenn.

Following a process in which Celsius contacted “over 130 parties,” a total of six companies, including Binance, Bank To The Future, Cumberland DRW, and Galaxy Digital, submitted offers for the company’s crypto assets.

After ceasing withdrawals in July 2022 and claiming “severe market circumstances” as the reason, the business ultimately decided to file for Chapter 11 bankruptcy protection the same month.


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Celsius Creditors to Sue Executives for Fraud

It has been proposed by the official committee of Celsius creditors that a lawsuit be filed against the company’s co-founder Alex Mashinsky and other executives for “fraud, recklessness, gross mismanagement, and self-interested conduct,” all of which contributed to the ultimate failure of the cryptocurrency lender.

Attorneys for the Official Committee of Unsecured Creditors said in a proposed complaint that was submitted to a New York Bankruptcy Court on February 14 that the action comes after six months of inquiries into Celsius’ current and past directors, officials, and employees.

The U.S. Trustee selected seven Celsius account holders to serve on the committee this past July. The group was established by the U.S. Trustee. Along with the interests of unsecured creditors, the committee acts as a representative for those who possess Celsius accounts.

According to documents written by attorneys from White & Case LLC, “The Committee’s inquiry has discovered substantial claims and causes of action based on fraud, negligence, gross mismanagement, and self-interested behavior by the Debtors’ former directors and officers.”

The planned legal action intends to file claims and causes of action against the following Celsius executives, people, and businesses that are affiliated with them:

The attorneys wrote in their letter that “Mr. Mashinsky, Mr. Leon, Mr. Goldstein, Mr. Beaudry, Ms. Urata-Thompson, and Mr. Treutler breached their fiduciary obligations to Celsius.” They went on to say that “those parties were aware Celsius was promising its customer’s interest payments that it could not afford and did nothing to fix the problem.”

The lawyers have also alleged that the executives made “negligent, reckless investments” that caused Celsius to lose $1 billion in a single year, while mismanagement led to another quarter-billion dollar loss “because they could not adequately account for the company’s assets and liabilities.” This loss was attributed to the fact that the executives “could not adequately account for the company’s assets and liabilities.”

According to the allegations made by the plaintiffs, “after that loss, they did not invest in or enhance the company’s systems to appropriately solve the problem, which resulted in subsequent losses.”

The motion also alleges that the executives of Celsius directed the company to spend “hundreds of millions of dollars” on public markets to artificially inflate the price of CEL tokens, while at the same time the executives “secretly sold tens of millions of CEL tokens” for their own benefit.

They did nothing except observe as Mr. Mashinsky carelessly gambled hundreds of millions of dollars on how the cryptocurrency market would move as they did so. They covered up Mr. Mashinsky’s persistently dishonest statements on Celsius’ investments and financial situation.

The attorneys continued by saying that “finally, when it became apparent that Celsius would be required to file for bankruptcy, the Prospective Defendants withdrew assets from the sinking ship while actively encouraging customers to keep their assets on the Celsius platform,” the prospective defendants did this.

The creditors committee of Celsius said that the planned lawsuit was just the “first of many stages” in their inquiry into suspected wrongdoings committed by former Celsius executives and the restitution of assets to victims.

On March 8, there will be a hearing on the planned complaint that was submitted.


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Creditors, Borrowers, and US Trustee Object to Celsius delaying reorganization plan

The reorganization plan has been put on hold because of a move that was taken by the debtors, which has been met with criticism from the unsecured committee of creditors as well as other parties participating in the bankruptcy case of crypto lending firm Celsius.

The committee, the holders of the Withhold account, the United States Trustee, and the Celsius borrowers all filed separate objections to a motion on February 8 that sought to extend the period of exclusivity for a Chapter 11 restructuring plan from February 15 to March 31. The motion was aimed at extending the period of exclusivity for a Chapter 11 restructuring plan. On March 31st, the exclusivity period that is now in effect will come to an end. The goal of the motion was to make a request that the due date be moved forward to March 31 from the current due date of February 15. If what is being suggested for an extension is approved and carried out as planned, creditors of Celsius will have the opportunity to provide a plan for the company’s restructuring until the 30th of June.

Because of the effect on Celsius customers, the Unsecured Creditors Committee of Celsius ordered that the bankruptcy case “must move towards a resolution.” This decision was made in light of the fact that the issue involves Celsius. They made this remark in light of the fact that many of the customers have been waiting for their payments for a number of months at this point in time. Objections were raised by the United States Trustee as well as by Celsius borrowers, who stated that the bankruptcy was “consum[ing] large amounts of professional expenditures” without offering any assurance that it would be resolved. These individuals stated that the bankruptcy was “consuming” large amounts of money.

The committee has issued a declaration in which it states, “Many account holders’ lives and financial situations have been thrown into disarray as a direct result of the previous behavior of the Debtors and several of its former directors and officials.” The declaration was made after the committee made a finding that “many account holders’ lives and financial situations have been thrown into disarray.” According to this announcement, “many account holders’ life and financial circumstances have been thrown into turmoil.” 


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Celsius’ Official Creditor Committee Denies Rejected Bids

There have been rumours circulating that the bids for Celsius’ crypto assets have been turned down, however the attorney who represents the official creditor committee for Celsius has refuted such rumours.

Attorneys from White & Case LLP, Gregory Pesce and Aaron Colodny, addressed the so-called “leaked” bids for Celsius’ crypto assets that were shared by cryptocurrency blogger Tiffany Fong during a “town hall” event held on Twitter Space on January 31. The event followed the examiner’s report on Celsius.

Pesce said that the notion that the bids had been turned down was completely and utterly incorrect.

The post that Fong made on Substack on January 27 pointed to at least five companies that were reportedly interested in placing a bid on Celsius’ crypto assets. These companies included Binance, Bank To The Future, Galaxy Digital, crypto trading company Cumberland DRW, and digital asset investment firm NovaWulf.

During that time, Fong said that the bids had been “abandoned for the most part,” which was a reference to a previous remark made by a Celsius lawyer declaring that the bids they had received up to that point “had not been persuasive.”

On the other hand, the counsel for the Celsius Official Committee of Unsecured Creditors (UCC) maintained that this was not the situation at all.

There has been no decision made on the proposals. That is completely false, and I have high hopes that I will be able to set the record straight about that misconception today.

The attorney would not clarify whether the bids that were referenced in the leak were true or not, but he did say that it was “regrettable” since it decreases the freedom that the committee has in the process of bargaining.

“Every day, we and the debtors are delivering public communications and private messages to possible investors about where they are in the process,” revealed Pesce. “These messages inform the potential investors about where they stand in the process.”

“The messages that we sent them are very planned out and structured so that we can play different parties against each other and make sure that we get the last dollar for Celsius account holders because the success of that process will determine recoveries here,” we wrote in one of our emails. “The messages that we sent them are very planned out and structured.”

“It’s thus unfortunate that this leak occurred,” the speaker said.

“It’s especially terrible that this has been commercialised by the source of that leak for the purpose of advertising her paid-for content page on Patreon,” he added, referring to Fong. “It’s particularly sad that this has been monetized by the source of that leak.”

Fong has given a response to the charge, in which he argues that the bids that were stolen are completely free and there is “no paywall.”

She said that the leaked bids are NOT hidden behind a paywall and that this is an odd assertion.

The crypto blogger shared information on the five bids on Substack the previous week, and as of the time of this writing, it is still possible to read the information without making a payment.

Pesce said that they are now conducting an investigation into how the leak happened and added that there was “serious worry that a possible investor that was engaged in the process may have been attempting to influence it for their personal gain.”

“With all of that being stated, we are putting in a lot of effort to guarantee that we will be able to make a decision as swiftly as possible and put an end to this bankruptcy. “We’re attempting to minimise the impact of that leak as much as we can,” he added.

In light of the most recent examiner’s findings on Celsius, the UCC lawyers provided some more commentary as well.

“I’ll be quite straightforward with you: the actions that Mr. Mashinsky and many other members of his staff took were unethical. Mr. Mashinsky has been dishonest. “By manipulating the tapes, they were able to cover up a good deal of his lying,” Colodny stated.

They put their own interests above that of the firm, and more significantly, they put their own interests ahead of those of the account holders.

The attorneys for the UCC have stated that they will continue to investigate a variety of options for recovery, such as rebranding the company as a new, publicly traded “recovery corporation,” selling off some of the company’s mining equipment, and investigating “winding down Celsius or transferring crypto to a third party.”


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Tether Denies Receiving Any Loans From Celsius

The company that is responsible for the most valuable stable coin in terms of market capitalization, Tether (USDT), alleges that they have never received a loan from the defunct cryptocurrency lender Celsius. This claim is based on the fact that Celsius no longer exists. The chief technical officer of the firm is the one who provided this information.

The chief technical officer of the cryptocurrency exchange Tether as well as the Bitfinex platform, Paolo Ardoino, went to Twitter on January 31 to make the statement that Tether has “never borrowed from Celsius.”

The tweet was issued as a response to the bankruptcy examiner report for Celsius, which claimed made a mistake in claiming that Tether was among Celsius’ creditors along with other firms like Three Arrows Capital, who borrowed $75 million from the company.

On the 31st of January, the examiner’s report was made public, and on page 183, it said that “Celsius’s loans to Tether were twice its credit limit.”

According to the report, “Tether’s exposure eventually grew to over $2 billion,” which became a problem in late September 2021 when it was described as presenting a “existential risk” to Celsius by the risk committee. The report also states that “Tether’s exposure eventually grew to over $2 billion.” In addition to this, the study states that “Tether’s exposure ultimately rose to more than $2 billion.”

Denying any exposure to problematic Celsius, Ardoino stated that examiner Shoba Pillay had jumbled up prepositions in the examiner report, and that what she really meant was “Celsius loans from Tether” rather than “Celsius loans to Tether.” This statement was made in response to the fact that Ardoino claimed that the examiner had made a mistake.

A contributor to the Financial Times called Kadhim Shubber started a dialogue on Twitter in which the chief technical officer of Tether remarked that the statement “Either is a mistake or a mischaracterization.”


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Investors Sell FTX, Celsius, BlockFi, Voyager

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Some investors who hold claims on FTX, Celsius Network, BlockFi, and Voyager Digital are attempting to sell such rights to other parties so that they don’t have to wait for the lengthy bankruptcy process that these companies will have to go through. This is done so that the investors don’t have to wait for the companies to be forced to file for bankruptcy.

There are at least hundreds of investors who have been negatively impacted by the recent failures of cryptocurrency platforms FTX, Celsius, BlockFi, and Voyager and do not wish to wait for a drawn-out bankruptcy process that does not guarantee that they will even be able to get anything back, according to the information that was provided by the startup company Xclaim, which specializes in the trading of cryptocurrency claims. Xclaim is a company that specializes in cryptocurrency claims trading.

In spite of the possibility that they would incur some financial losses as a direct result of this transaction, the investors have decided to put their claims up for auction in the hope of turning a profit of some sort from the current predicament.

There were over 10,000 claims that had been posted, with 9,072 claims having been posted on Celsius Network, 93 claims having been posted on Voyager, 67 claims having been posted on FTX, and 23 claims having been put on BlockFi.

Matt Sedigh, the man who founded Xclaim, recently gave an interview to the Wall Street Journal in which he stated that his company has been taking calls from creditors located all over the world.

According to the executive, two thirds of the claims that were submitted came from creditors located in China, Hong Kong, and Taiwan, respectively.

It has come to the attention of certain debt investors and hedge funds that they may be interested in purchasing claims.

There have been a number of companies, including Contrarian Capital Management, Invictus Global Management, and NovaWulf Digital Management, that have acquired parts of the claims.

During this period, Celsius is making preparations to introduce a motion that will extend the deadline for users to submit their claims. This motion will allow for more time for consumers to submit their claims.

According to recent allegations, former FTX CEO Sam Bankman-Fried is believed to have cashed out a total of $684,000 in the time after he was released on bond.


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US court sets deadline for Celsius bankruptcy claimants

The Celsius bankruptcy case is still pending in the United States Bankruptcy Court for the southern district of New York State, which has established a new deadline for the submission of documents related to the case.

Those who intend to register any claims against the former digital asset lender are advised to do so before the deadline that has been established, which is stated in an official document.

Whoever chooses to do so is required to provide evidence of claim no later than January 3, 2023 at 5:00 p.m. Eastern Time. This includes individuals, partnerships, companies, joint ventures, and trusts.

Celsius created a thread on Twitter to remind its former users of the recent court deadline approval along with detailed information on the filing process for claims.

The judgement was taken not long after the independent examiner who was looking into the Celsius case made an accusation that the corporation had “insufficient” accounting and operational controls in its administration of client monies.

The actions of Celsius have been subject to the constant surveillance of authorities.

Customers alleged that the former cryptocurrency lender used the assets of new users to cover existing yields and facilitate withdrawals, which resulted in a court ruling being issued on November 1 by the judge who was presiding over the case. The ruling ordered an investigation into the possibility that Celsius was a Ponzi scheme.

The lawsuit is set to proceed in court once again on December 5 of this year, when the next scheduled hearing occurs.

The latest developments in the bankruptcy case involving Celsius come on the wake of the failure of yet another major cryptocurrency platform.

The present liquidity problem at FTX, which has developed into a bankruptcy scandal, is just one more instance in which authorities need to assist previous customers and investors who have suffered financial losses.


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Examiner: Celsius’ accounting and operational controls were ‘insufficient’

In the bankruptcy case involving crypto lender Celsius, the independent examiner claims that the company did not establish “adequate” accounting and operational controls in its handling of client cash. These allegations are based on the fact that the company failed to establish “adequate” accounting and operational controls. The examiner made these accusations in their report.

In an initial report that was made public on November 19 by the court that assigned Examiner Shoba Pillay the task of looking into the bitcoin loan site, Examiner Shoba Pillay brought up several critical issues concerning the site that is no longer in operation.

One of the most shocking admissions made in Pillay’s report was the fact that Celsius’ Custody programme was initiated “without proper accounting and operational controls or technological infrastructure.” This was one of the most important discoveries made in the investigation. Because of this, the corporation was able to make up for shortages in its Custody wallet with monies from its other assets.

When the Custody programme was launched on April 15, users of the Celsius platform were given the ability to transfer coins to and from one another, swap coins, and utilise coins as collateral for loans.

Because the client’s wallets were jumbled up, it is now difficult to establish which assets belonged to the customer at the time that the consumer’s bankruptcy was filed. This is because the wallets were mixed together.

The preliminary analysis has also provided light on what ultimately pushed the lending platform to suspend withdrawals on June 12th, and the reasons that decision are described in the paper. This decision was made because of the findings of the investigation.

According to Pillay, the moment that marked the turning point was on June 11, when the custodial wallets of a number of different customers ran out of cash.

By the 24th of June, this figure had dropped by an additional 24%, bringing the total amount of insufficient finance down to $50.5 million.

Celsius continued to struggle financially during the month of May, and one of the key factors contributing to this was the collapse of the Terra environment.

In addition, Celsius disclosed on November 20 that the date of its next court case is scheduled to take place on December 5. At this session, the corporation plans to further discussions over a range of topics, including its custody and withholding accounts, which will be discussed further.


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