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The bankrupt Celsius spent more than $3 million on lawyers, but nothing was paid to clients

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The Celsius Network cryptocurrency lending service spent $3.35 million to pay for the services of law firms Kirkland and Ellis and Akin Gump for participating in the restructuring process. The funds were paid to the companies in the period from July 13 to July 31.

Moreover, Kirkland and Ellis received almost $2.6 million, and Akin Gump — $750,000. The clients affected by the bankruptcy of the company have not been able to receive money. But so far, the Celsius bankruptcy procedure is being greatly delayed.

Sad story of Celsius

Celsius is a centralized cryptolanding platform founded by Alex Mashinsky, Nuke Goldstein and Daniel Leon. Its main services were cryptocurrency deposits and loans. The company positioned itself as an alternative to traditional banks and provided financial services related to cryptocurrencies.

The platform was officially launched in 2017, and a year later the project team released its own token — CEL. During its operation, the company has attracted more than $860 million in investments. In December 2021, the company managed assets worth $24 billion, however, but in May 2022 this figure dropped to $12 billion.

The market downturn that began in the spring also affected Celsius — on June 13, 2022, the company suddenly announced the suspension of withdrawal of funds. A month later, it initiated Chapter 11 bankruptcy proceedings in the District Court of the Southern District of New York. The company promised to restore activity on the platform and return all funds to customers.

The platform presented a business reorganization plan, promising to use the proceeds from the work of the mining "daughter" to repay creditors' claims. Celsius' liabilities exceed the company's assets by $2.85 billion.

On September 1, it became known that a class action was filed with the US Bankruptcy Court. The interests of a group of 64 investors who own cryptocurrencies worth $22.5 million in the custodial service Celsius are represented by the law firm Togut, Segal & Segal. In the statement, the plaintiffs note that Celsius has the necessary volume and types of cryptocurrencies for a refund, but it does not do this. According to the terms of use of Celsius, the right to any digital assets in the Celsius wallet always belongs to customers and is not transferred to Celsius, these assets are separated from other products of the platform.

Regulators have also filed charges against Celsius amid bankruptcy proceedings. On September 7, the Vermont Department of Financial Regulation stated that both the credit platform and Mashinsky personally misled state regulators regarding the financial condition of the firm and its compliance with securities laws.

The auction for the sale of the assets of the Celsius Network should take place no later than October 20.

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