Celsius Upcoming Withdrawals: Are Your Assets at Risk?
Celsius, a bankrupt cryptocurrency lending firm, has issued an official statement regarding the pending withdrawals for eligible users. In a 1,411-page court filing with the US Bankruptcy Court in the Southern District of New York, Celsius has provided a list of users who will be able to retrieve approximately 94% of their eligible custody assets. The remaining 6% of assets will be determined at a later date.
Before processing any withdrawals, eligible users are required to update their Celsius accounts with the necessary information, such as Anti-Money Laundering (AML) and Know Your Customer (KYC) data, as well as the withdrawal destination address. Celsius stresses that failure to provide the necessary information will result in the inability to withdraw assets.
Gas And Transaction Fees For Withdrawals
In addition to the required information, eligible users will also be informed of the gas and transaction fees associated with the withdrawal process. Celsius has stated that those who do not have sufficient funds in their accounts to cover these fees will not be able to withdraw their assets.
The release of this information follows a court filing submitted by the court-appointed examiner, Shoba Pillay, which sheds light on various aspects of Celsius’ operations, including its relationship with the now-defunct FTX exchange. The report revealed that Celsius utilized Quickbooks software for financial management, similar to FTX and Alameda Research.
The examiner’s report also alleges that Celsius and its founder, Alex Mashinsky, failed to deliver on their promises regarding the Celsius (CEL) token and other business ventures. It reveals questionable actions taken by the cryptocurrency lending firm, causing financial hardship for many of its customers. The report provides detailed evidence of improper and self-serving behavior that has caused harm to a significant number of people.
The Official Committee of Unsecured Creditors (UCC) of Celsius is taking a firm stance on the matter and is determined to hold those responsible accountable for their actions.
UCC Lawyers Refute Claims Of Leaked Bids for Celsius Crypto Assets
A recent Twitter Space named “town hall” saw lawyers from White & Case LLP, Gregory Pesce, and Aaron Colodny, refute claims that the bids for Celsius’ crypto assets were mostly abandoned.
To provide some context to the issue, recently a blogger named Tiffany Fong had written about this in a post in her blog on Jan 27, saying that five companies were interested in buying Celsius’s crypto assets, including Binance, Bank To The Future, Galaxy Digital, Cumberland DRW, and NovaWulf. The lawyers denied these claims during the town hall.
Fong had previously stated that the bids were “for the most part, abandoned,” citing a statement from a Celsius lawyer who proclaimed the bids they received so far “have not been compelling.”
However, Pesce and Colodny, representing the Celsius Official Committee of Unsecured Creditors (UCC), denied this claim and stated that the bids have not been rejected.
“The assertion that the bids have been rejected is just categorically false,” said Pesce. “Every day, we and the debtors are providing public messages and private messages to potential investors about where they stand in the process.” The UCC lawyers are now investigating the leak and aim to choose a path and bring the bankruptcy to a close as quickly as possible.
UCC Lawyers Speak Out
The UCC lawyers also made comments in light of the recent examiner’s report on Celsius. “Mr. Mashinsky and many members of his team did wrong. They put themselves ahead of the company and its account holders,” said Colodny. The UCC is exploring options for recovery, including becoming a publicly-traded recovery corporation, selling off some of its mining equipment, winding down Celsius or transferring crypto to a third party.
The leaking of the bids has caused concern, with the UCC lawyers stating that there is a potential for manipulation by an investor involved in the process. Fong has responded to the accusation, claiming that the leaked bids were 100% free and not behind a paywall. Despite the controversy surrounding the leak, the UCC lawyers remain committed to finding the best outcome for Celsius account holders.
Celsius Network to Issue New Token for Repaying Defrauded Investors
Celsius Network, a leading crypto lending platform, has announced plans to repay creditors by issuing a new token. The move comes as the company proposes to emerge from bankruptcy and become a regulated cryptocurrency exchange.
Their elaborate plan was revealed during a video-court hearing by the company’s attorney Ross M Kwasteniet. According to the lawyer, this would produce more funds for creditors than selling the assets that are difficult to liquidate at the available prices.
The proposal will be first put up to the creditors, including Celsius customers who have cryptocurrency stored on the company’s platform. After that, the US bankruptcy Chief Judge Glenn Martin will consider the voting results to determine whether to accept the proposal or not.
Most of the Celsius customers are happy about the decision as this move is representing the company’s commitment to transparency and fairness. Even though the CEO has been accused of misrepresenting the facts, this move is still an innovative approach to solving Celsius’s current liquidity problem.
The Feds want to regulate the crypto industry now more than ever as many investors are suffering from the fraudulent activities of the system. Overall, the move towards becoming a regulated cryptocurrency platform would be a positive step forward for defamed Celsius, as it would help to strengthen the company’s financial position & ultimately provide greater benefits for its customers. It is likely to be closely watched by other companies in the space.
Celsius & Defamed CEO Alex Mahinsky: What Went Wrong?
Celsius CEO Alex Mashinsky and his team were accused of defrauding investors out of billions of dollars through a series of illegal activities. The company, which proposed to offer a platform for lending and borrowing cryptocurrency, allegedly used funds from new investors to pay returns to earlier investors, in a classic Ponzi scheme.
The legal actions against Mashinsky and Celsius Network are ongoing, but the damage has already been done to the many individuals and institutions that trusted in the company and lost their investments.
This case serves as a reminder of the importance of thorough due diligence and caution when investing in the cryptocurrency market.
Former CEO Of Celsius Network Sued For Defrauding Investors Out Of Billions
New York Attorney General Letitia James filed a lawsuit against Alex Mashinsky, former CEO of the bankrupt crypto lending platform Celsius Network, for defrauding investors – including 26,00 people from NY – out of billions of dollars worth of cryptocurrency.
According to the lawsuit, James argued Mashinsky repeatedly made false and misleading statements about the state of Celsius and its investment products. While promising people heaven, James noted Mashinsky delivered hell to Celsius investors knowingly.
Notably, Celsius lost millions of dollars to risky businesses that included crypto assets and did not reveal the company’s financial statements to the investors until the worst hit. Additionally, the lawsuit argues that the former Celsius CEO failed to register as a securities and commodities dealer let alone as a salesperson.
As such, the lawsuit wants the court to ban Mashinsky from doing business in New York and require him to pay damages, restitution, and disgorgement.
“As the former CEO of Celsius, Alex Mashinsky promised to lead investors to financial freedom but led them down a path of financial ruin,” said Attorney General James. “The law is clear that making false and unsubstantiated promises and misleading investors is illegal. Former CEO Of Celsius Network Sued For Defrauding Investors Out Of Billions.
Today, we are taking action on behalf of thousands of New Yorkers who were defrauded by Mr. Mashinsky to recoup their losses. My office will stay vigilant and ensure that bad actors trying to take advantage of New York investors are held accountable.”
Attorney General Condemns Crypto Companies Operating Like Celsius
According to Attorney General James, most of the Celsius deposits from New Yorkers were from people’s lifetime savings. While continuing to warn cryptocurrency traders to be careful with projects that promise hefty returns, James has urged employees in the blockchain industry to report businesses operating fraudulently.
In the past two years, New York Attorney General James has focused on crypto projects preying on people’s money. For instance, In September 2022, James sued Nexo Inc. for operating illegally and defrauding investors.
In June 2022, James warned New Yorkers about investing in cryptocurrencies after the market lost over $2.2 trillion in unregulated businesses.
In the same month, James reached a nearly $1 million settlement with BlockFi for offering unregistered securities.
The lawsuit comes a day after Judge Martin Glenn, the chief bankruptcy judge in the Southern District of New York, ruled Celsius can liquidate customers’ stablecoins to meet costs associated with case proceedings.
Celsius Network’s Stablecoins Face Liquidation To Cover Bankruptcy Costs
Judge Martin Glenn, the chief United States Bankruptcy Judge in the Southern District of New York, has ruled that ownership of the assets in the Celsius Network’s Earn Accounts belongs to debtors. As such, Glenn ruled that all stablecoins deposited in the Earn Accounts by Celsius customers will be liquidated to meet the cost of bankruptcy proceedings. The issue at hand saw Celsius customers trapped by terms and conditions in the Earn Program.
Nonetheless, Judge Glenn indicated the court does not take lightly the results of his decision on individual investors. Moreover, Celsius customers will have to wait longer before receiving a refund from the bankrupt firm.
“Debtors contend that because the Earn Assets, including stablecoins, are property of the Estates, the Debtors can sell stablecoins to create liquidity to fund administrative expenses associated with these bankruptcy cases,” the court filings noted.
The ruling follows a recent motion filed by Celsius Network to extend the prior schedule for the Bar Date before Judge Glenn, to January 10, 2023, at 11:00 a.m. ET.
Celsius Plays Dirty at the Mother Court
According to Celsius’s terms and conditions for the Earn program, deposited crypto assets belonged to the company following the bankruptcy filing. The court noted that customers hardly take time to completely understand the legal limitations they put themselves into by accepting terms in good faith. As such, the court felt obligated to side with the debtors due to the ‘unambiguous’ terms of use.
“The issue of ownership of the assets in the Earn Accounts is a contract law issue. The Debtors and Committee argue that the cryptocurrency assets deposited in Earn Accounts were owned by the Debtors and are now the property of the Estates. Many Earn account holders (“Account Holders”) argue that the Account Holders, rather than Celsius, own the cryptocurrency assets in the Earn Accounts and that cryptocurrency assets should promptly be returned to them,” the court filings noted.
Forward, the judge concluded that creditors will have an opportunity to have a full hearing on the merits of these arguments during the claims resolution process.
Meanwhile, Celsius customers and investors will continue waiting for the bankruptcy proceedings to take due course to get a full refund. Moreover, the cryptocurrency market is continually changing and receiving different law interpretations. Nonetheless, the Biden administration has ordered federal agencies including the SEC and CFTC to clump hard on predatory crypto projects.
Celsius Files Motion to Extend Bar Date to February 9, When Will Customers Get Fully Compensated?
Celsius network has filed a motion to extend the prior schedule for the Bar Date before Martin Glenn, Chief United States Bankruptcy Judge. According to court filings by Kirkland & Ellis LLP – the legal counsel serving as restructuring advisor to Celsius – the motion will be held on January 10, 2023, at 11:00 a.m., prevailing Eastern Time. However, due to prevailing conditions, the motion hearing is expected to be conducted remotely using Zoom for Government.
While the company has accumulated hundreds of millions in debt to customers and investors, Celsius has only committed approximately $44 million. Notably, over 17,200 claims were filed by Celsius creditors as of December 29, 2022. Thereby ballooning the burden of Kirkland & Ellis LLP in the restructuring process.
Nonetheless, Celsius victims are not interested in the restructuring process but only want their money returned. Over six months later, the Celsius network is still hiding behind legal shadows and lengthy court proceedings to distract the real attention from creditors and affected users.
Celsius Stakeholders Losses Patients on Bankruptcy Proceedings
At the time Celsius network filed for voluntary Chapter 11 proceedings to provide an opportunity to stabilize its business, approximately $167 million in cash was available to facilitate operations. As the bankruptcy proceedings take longer, Celsius users are worried more cash is being spent on legal fees instead of refunding creditors.
Moreover, the company halted withdrawals, swaps, and transfers between accounts citing ‘extreme market conditions’. The company’s predicaments have escalated after Bitcoin miner Core Scientific (CORZ) announced it will shut down over 37,000 crypto mining rigs. Nonetheless, Celsius indicated that its is does not oppose the closure of Core’s mining rigs due to its financial obligations.
“Celsius does not oppose the relief sought in the Rejection Motion—indeed, Celsius believes the Celsius Contracts are even worse for Core economically than what Core believes. Further, Celsius will agree that Core can power down all of the Celsius rigs on January 3rd to stop the losses that Core alleges it suffers from continuing to perform under the Celsius Contracts,” Celsius noted.
The company’s legal protection comes at a time the United States is grappling to regulate the crypto market to protect investors from predatory projects.
For instance, federal agencies – including the Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) – have issued a joint warning statement on related crypto assets risks to financial institutions.
Breaking!! Here’s How Celsius Customers Can Submit A Proof Of Claim
Celsius’s Bankruptcy Crisis
Celsius was a fintech platform that provides borrowing, digital and fiat payments, and interest-bearing savings accounts.
In June 2022, it filed for bankruptcy. According to Bloomberg, Celsius co-founder and CEO Alex Mashinsky said that the platform’s digital asset count increased more quickly than Celsius was prepared to use.
As of July 13, 2022, the platform had roughly $4.31 billion in assets and $5.5 billion in liabilities, according to court records. Following the bankruptcy filing, there were more customer trips, which caused the withdrawals to stop on June 13, 2022.
US Court’s Deadline
The bar date of January 3, 2023, has been approved for Celsius’s clients; till this date, they must submit a claim for the entities that were held until July 13th, i.e., before the firm became insolvent.
December 5th is the next scheduled day for court proceedings, during which additional arguments about the custody and withholding accounts will be considered. Similar to every other cryptocurrency platform in the present market, the Celsius network makes the same promise: “data and asset security remain a top concern for all.”
Celsius’s Plan For Reorganization
In motions, Celsius asked the court to extend the time it had to present a reorganization plan.
Celsius was given 120 days of exclusivity to present a bankruptcy plan after filing for Chapter 11 bankruptcy in July.
According to court documents, the lender utilized the four months to “lay the foundation for additional conversations” aimed at offering relief to its consumers.
Celsius Customer Claims: FAQs
- How do Assets and Liabilities Schedules work?
Celsius files records with the Court as part of our Chapter 11 proceedings that include, among other things, a list of all customer balance sheets as of July 13, 2022, the date the reform started, as well as a list of customer transactions in the 90 days prior to the Chapter 11 filing. Customers can obtain the Schedules at https://cases.stretto.com/celsius/court-docket/schedule-statements/.
- Do I need to submit a claim?
There is no need to fill up and submit a proof of claim form if you accept Celsius’ records as filed; no further action is necessary. You would need to provide evidence of claim if you disagree with the data or if your claim was flagged as “contingent,” “unliquidated,” or “disputed.”
Please be aware that the Stretto website’s current proof of claim form will likely be updated to make it simpler for users to submit data about their cryptocurrency balance.
- When is the last day to submit a claim?
The “Bar Date” or deadline to submit a claim has not yet been set by the Court. In the near future, Celsius will submit a motion asking the Court to adopt claim-filing procedures and set a bar date.
Customers will get comprehensive instructions on how to submit a claim as soon as the processes are approved. Stretto will send this notice to the email address connected to your Celsius account, and it will make any deadlines crystal apparent.
- What will my proof of claim look like once it has been received?
After submitting your form online, you will get a confirmation email and a reference number for your proof of claim.
If you decide to mail your claim, you must send two copies along with a self-addressed, postage-paid envelope for receipt confirmation.
- Once the bar date has passed, what happens?
Celsius will compare all submitted claims to the records after the Bar Date. Eligible claims will be paid out in accordance with the Chapter 11 Plan after all claims have been compared and authorized by the Court.
Bottom line
Due to the company’s incompetence, the clients are currently unsure whether their assets should be included in the bankruptcy petition.
Celsius Files Time Extension To Submit Its Reorganization Plan
Celsius Network, a bankrupt crypto lender has filed an appeal to increase the exclusivity timeframe to submit the reorganization plan. This is the time when Celsius Network claims the right to submit the proper plan to reorganize the firm. Celsius is currently hit with numerous lawsuits along with its bankruptcy case.
On the other hand, the judge has asked Celsius not to pay retention bonus to a few of its employees which accounts to around $3 million. As per Celsius lawyers, this reorganization plan is an important one to stop its employees from moving which will divide the $3 million among 62 of the 274 employees.
Former Celsius Exec is now Crypto Regulatory Policy Head at JPMorgan ! 
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According to a Wednesday Bloomberg story, Aaron Iovine has been hired by JPMorgan (JPM) to the newly established position of head of crypto regulatory policy. Given the erratic market conditions in recent months, which included a decline in cryptocurrency values and the insolvency of numerous companies, the world’s largest investment banking organization wants to broaden the regulatory scope for digital assets.
As head of policy and regulatory affairs for cryptocurrency lender Celsius, which filed for bankruptcy protection in July, Iovine spent eight months working for one of these companies in the past. According to his LinkedIn profile, Iovine held this position from February to September of this year.
User Lost $40M Worth of BTC in Celsius Network Crisis
The post User Lost $40M Worth of BTC in Celsius Network Crisis appeared first on Coinpedia Fintech News
The recent breach of Celsius network users’ transactions revealed some interesting development days after the tragic incident occurred.
It is worth recalling that the troubled cryptocurrency lender Celsius disclosed the identities and transaction information of thousands of customers, who incurred massive losses. The document is 1,450 pages long and contains personal information on Celsius’ customers, such as wallet ID, type of tokens owned, and value. The top ten Celsius investors lost more than $200.6 million at the current currency rate, according to the statistics.
Jacob Benjamin Fite, a Celsius user went through a major loss due to the event. Fite’s major holding is Bitcoin (BTC) which represents 98% of his portfolio.
Celsius Has Released Its Final Bid Deadline, FTX To Dive In?
In early June, the cryptocurrency lending company Celcius Network suddenly announced the suspension of withdrawals. The company filed for bankruptcy after just a month. It was found that the company had a $1.2 billion gap in its balance sheet.
The crypto lender went on to set a date for bidding of its assets after filing for bankruptcy. Following the company’s filing for Chapter 11 bankruptcy, many big players, including FTX U.S., have been displaying their interest in acquiring Celsius’s assets.
According to the most recent filing of Monday with the U.S. Bankruptcy Court for the Southern District of New York, Celsius Network has put a final bid deadline on October 17, 4 PM. The company will also be conducting an auction on October 20. The filing mentions that the sale hearing will be held on November 1 before the Chief US Bankruptcy Judge Martin Glenn.
It all went downhill for Celsius with the collapse of the Terra ecosystem, which eroded more than $60 billion in investors’ wealth. This led to the downfall of hedge fund Three Arrows Capital (3AC) as well, which had huge positions in LUNA. Consequently, the cascading effect was felt by Celsius Network, which lent a considerable amount to 3AC.
Notably, crypto exchange FTX has been one of the forerunners in the bid for Celsius’s assets. FTX was seen acquiring some of the distressed industry players this year, with the ongoing intense crypto meltdown this year.
U.S. Department of Justice Speaks Out
Back in June, Celsius Network froze withdrawals, citing huge liquidity issues. The U.S. Department of Justice (DoJ) has criticised Celsius’s action of resuming withdrawals for select customers and selling its stablecoin holdings.
The DoJ said that Celsius’s finances have minimum transparency, and this move associated with withdrawals shouldn’t be validated until a proper independent examiner has been assigned to Celsius. In addition to the DoJ, three more regulatory agencies have objected to Celsius selling its stablecoin holdings.
They have gone against it since they believe there’s a risk of Celsius using this capital to resume operations, violating U.S. laws. Last week, a U.S. Trustee for the DOJ, William Harrington, objected to Celsius opening its withdrawals in a filing. Harrington stated: “The Motions are premature and should be denied until after the Examiner Report is filed. First, the Withdrawal Motion seeks to impulsively distribute funds to one group of creditors in advance of a fulsome understanding of the Debtors’ cryptocurrency holdings.”
Suspicious Activity By The Founder
As per the latest report, Celsius Network founder Alex Mashinsky withdrew a whopping $10 million from the platform just ahead of the cryptocurrency lender freezing its customer accounts, supposedly to pay taxes. This pops up the question of whether the Celsius founder was aware that the crypto lender’s clients would have their funds locked on the platform in advance.
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CEL Token Spike 15% As FTX Bids To Acquire Celsius Network
The year 2022 has seen many acquisitions among which the crypto exchange FTX has been the major contributor as the exchange has acquired major distressed firms. In the month of July, FTX had eyed acquiring the Bithumb exchange and now the firm is looking forward to buying crypto lender Voyager Digital and Celsius network.
At the start of this week, FTX won the bid against Binance to acquire the assets of Voyager Digital and now the firm is moving ahead to bid for the assets of Celsius Network. As per the reports the firm is also looking forward to raising $1 billion from the market.
The Celcius acquisition comes after its CEO Alex Mashinsky resigned yesterday, September 27th, months after the firm filed for Chapter 11 bankruptcy protection. Though his resignation is with an immediate effect, Alex has claimed to assist the company in giving its creditors the best outcome.
Now, if FTX successfully manages to acquire Celsius, the exchange will see its foothold in the majority of crypto sectors. However, it’s still not known if Sam Bankman-Fried led companies which include FTX and Alameda Research are bidding to acquire all or only a few of Celsius’s assets.
CEL Price Surge 15%
Celsius’ network’s native currency CEL which had plunged nearly 7% after the news of Alex Mashinsky’s resignation was rumored around the space. However, now as the news of FTX bidding to acquire Celsius was announced, the CEL token price jumped nearly 15%. At the time of reporting, CEL is selling at $1.53 with a rise of 2.02% over the last 24hrs.
Along with a spree of acquisitions, FTX is also looking forward to relocating its headquarters from Chicago to Miami. Also, Zach Dexter is said to be appointed as a new president succeeding Brett Harrison.
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Celsius Shareholders Ask For Legal Representation In Bankruptcy Proceedings
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In a September 22 court filing, Celsius shareholders pleaded for an official legal representation that would represent their interest in the bankruptcy case. The filing mentions that there is a clear need for this fiduciary representation because of only two economic stakeholder groups — retail customers and equity holders.
The shareholders claim the Unsecured Creditors Committee (UCC) is busy ensuring that retail customers get maximum value without even considering the interests of the equity holders. The shareholders are also expecting Celsius to “dollarize” the crypto holdings of its customers.
As per the filing, Celsius is intending to return customers’ crypto instead of the fiat value of the asset, which is breaching the Bankruptcy Code, and supposedly it could negatively impact the Equity Holders’ recovery. The idea that Celsius might be planning to repay its creditors using crypto IOU tokens came up from a leaked audio file.
Celsius Network Revival Plan – Here’s What It Includes!
During a company all-hands meeting two weeks ago, CEO Alex Mashinsky was captured on tape discussing a plan to restart the business, code-named Kelvin.
The creditor committee, which safeguards clients’ and creditors’ rights during the bankruptcy procedure, acknowledged that Mashinsky had met with them and made a proposal. The committee didn’t publicly express its judgment on the plan, though. At that time, Gregory Pesce, the attorney for the creditor committee, informed the court that the group is in discussions with Celsius and requests that it submit a complete plan to the court.
After intensive research on how Celcius would pay back the customer’s dues, The strategy to reimburse clients, which involves releasing new wrapped assets to trade on other platforms, is further described in a recently released recording of Celsius’ leadership.
According to a Youtube recording by Tiffany Fong. The Co-founder and CTO Nuke Goldstein of the company appear to provide a more thorough description of the proposal to reimburse Earn consumers.
A beam of light for Celcius clients
The plan is to distribute wrapped tokens, known as Cx tokens, to symbolize the ratio of how much the company owes to how much it has available by first putting Celsius’ remaining cash designated for client repayment into wallets. Customers that are holding onto their bitcoin will, for instance, receive CxBTC tokens.
If the customer can wait, then there are in a position of getting a better payout when additional revenue comes but in the meantime, the client can redeem their wrapped tokens.
The longer you wait, the more likely it is that the gap will close, Tiffany added on the audio clip. You can always redeem yourself, though.
According to Goldstein, Celsius intends to make the wrapped tokens tradeable on other platforms. Users might go to Uniswap or other sites, withdraw their tokens, and let the market determine the token’s price.
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Will Celsius Network Sell Nearly $23 Million Worth of Stablecoin Holdings?
Bankrupt cryptocurrency lender Celsius is getting conscious of its users and future operations. Celsius filed for bankruptcy in July after a long battle resolving issues, leaving the once top crypto lending firm with nearly $3 billion in liabilities. Being at the chapter 11 bankruptcy proceedings, Celsius has requested the court to sell its holdings of stablecoin to fund its operations by earning liquidity, according to new court filings.
Celsius In Extreme Fear
Celsius is getting woes about the uncertainty of its future operations and dominance in the crypto market. The users of the lending platform are not even sure whether they will see their crypto that is locked in the platform.
Celsius was established in 2017 and became one of the first and largest cryptocurrency platforms where users could deposit their owned crypto assets to generate rewards or get loans using their assets as collateral. Celsius has attracted more than 1.7 million registered users and nearly 300K active users, with its 18% interest rate.
Celsius currently has eleven different forms of stablecoin, whose value is nearly $23 million. The stablecoin is owned by Debtor Celsius Network Limited (UK), Debtor Celsius Network LLC (US), and non-Debtor Celsius Network EU UAB (LT).
The court filing stated, “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.”
Restore Celsius’ Reputation
The CEO of Celsius network, Alex Mashinsky, believes that the selling of stablecoin will help the firm to begin its business in a proper way. If the presiding Judge Martin Glenn, the Chief U.S. bankruptcy judge, approves the filings, then the selling amount of stablecoin would initially be used for paying for the operations in the Celsius network.
In addition, the selling amount would also be used to pay back the Debtors’ estate, a part of Celsius’ bankruptcy process. Recently, Celsius’ bankruptcy judge gave permission to conduct an independent examination of the crypto lending firm.
The failure of the revolutionizing crypto lending firm Celsius became one of the main reasons behind the crypto market crash. Alex Mashinsky held a meeting with Celsius’ staff on 8 September to rebuild the firm in a new way. Celsius now wants to offer custodial services to users, and it needs to build trust in the crypto market to regain its position.
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Did Celsius Network Manipulate CEL Token? Here’s What Bankruptcy Regulator Has To Say – Coinpedia – Fintech & Cryptocurreny News Media
Crypto lender Celsius continues to take unexpected turns now. After accusing the former manager of stealing millions of dollars, the bankrupt lender has now faced big trouble. The Vermont Department of Financial Regulation accused Celsius of running an alleged Ponzi scheme in a court filing.
The latest news from the firm is that Celsius network has misguided its investors about financial difficulty as the crypto lender used its native CEL token to strengthen its balance sheet and illegally used the funds of new investors to repay its old investors.
On Wednesday, Vermont’s financial regulator filed with the U.S. Bankruptcy Court in the Southern District of New York that Celsius and Mashinsky “made false and misleading claims to investors” that allegedly reduced the risks of market volatility and tempted investors to invest more in the platform. According to the court filing, over forty U.S. state regulators are now all set to investigate Celsius’s bankruptcy details, transaction history, and operations.
Vermont’s financial regulator claimed that Celsius was running with low funds even before the bear market. The firm was hiding its huge losses, dying financial condition, and asset deficit from its investors to keep them glued to their investment goals on the platform.
Vermont also mentioned that the crypto lender never made the required revenue to provide its promised yields to the investors. The state regulators and U.S. Trustee’s Office requested the court investigate Celsius’s bankruptcy by appointing an independent examiner.
For example, according to Vermont’s filing, Celsius CEO Alex Mashinsky informed investors that “all funds are safe” on 11 May, but the fact was Celsius was running on a loss of approximately $454 million between 2 May and 12 May.
Strategy Behind Manipulating CEL Tokens
Celsius did not want to lose their investors and platform’s dominance in the crypto market. Vermont’s financial regulator presented solid evidence and claimed that Celsius used its native CEL tokens to manipulate investors and its price by using new investors’ funds to buy extra tokens and offering many of them to old investors in the form of promised interest.
Celsius purchased CEL tokens to use it as a balance sheet stabilizer. Celsius manipulated the CEL token’s price by boosting its Net Position by spending hundreds of millions of dollars of investors’ funds and inflating the company’s CEL holdings on its financial statement and balance sheet.
The price-fixing of CEL tokens led regulators to launch an investigation against Celsius. Celsius’s bankruptcy shook the entire crypto community as it failed to gain investors’ trust.