Celsius bankruptcy plan faces backlash from retail crypto borrowers claiming institutional bias News ▸ US ▸ Celsius ▸ Bitcoin ▸ Bankruptcy
Celsius bankruptcy plan faces backlash from retail crypto borrowers claiming institutional bias
Celsius faces backlash over bankruptcy plan perceived as preferential to institutional lenders.
1 min read
Updated: Sep. 21, 2023 at 7:43 am UTC
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Retail crypto borrowers are filing objections to Celsius Network’s bankruptcy reorganization plan, arguing it unfairly favors institutional lenders over retail clients like himself.
Johan Bronge, an angel investor who took out several bitcoin-backed loans from Celsius before its bankruptcy, said in a letter to the court that the plan allows institutional lenders to repay their loans and reclaim their crypto collateral while denying retail borrowers the same option.
“I strongly object to the use of these terms. Nowhere in the TOS, Truth in Lending Disclosure Statement or the Loan Detail Summary are these terms to be found,” wrote Bronge regarding the plan’s use of new terminology like “Retail Borrower Deposit Claim.”
Bronge also objected to the plan’s mix of the petition date and current market prices in collateral valuation, which he argues could lead retail borrowers to lose more of their crypto collateral beyond the haircut all creditors are taking.
Additionally, Bronge criticized the lack of choice presented to creditors to vote for an orderly wind down or Celsius’ proposed reorganization into a new company.
To remedy these issues, Bronge asked the court to allow retail borrowers to repay loans and reclaim collateral like institutional lenders, maintain original loan agreement terminology, use consistent valuation methodology for all collateral, and give creditors a vote between wind down or reorganization pathways.
Bronge’s objection highlights the tensions between Celsius’ retail and institutional clients as the embattled crypto lender attempts to emerge from bankruptcy. With billions in liabilities owed to thousands of creditors, navigating competing interests will be a significant challenge for Celsius as it seeks approval of its reorganization plan.
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Liam 'Akiba' Wright
Also known as "Akiba," Liam is a reporter, editor and podcast producer at CryptoSlate. He believes that decentralized technology has the potential to make widespread positive change.
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Celsius Network is a P2P decentralized lending & borrowing platform.
Celsius Network
Celsius Network is a bankrupt cryptocurrency lending company that was founded in 2017 and headquartered in Hoboken, New Jersey.