Celsius shareholders want their own legal representation in bankruptcy case News ▸ US ▸ Celsius ▸ Bankruptcy
Celsius shareholders want their own legal representation in bankruptcy case
The shareholders want Celsius to "dollarize" the crypto holdings of its customers.
2 min read
Updated: Sep. 23, 2022 at 2:53 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Celsius shareholders have requested an official legal representation that would represent their interest in the bankruptcy proceedings, according to a Sept. 22 court filing.
According to the filing, there is a clear need for this fiduciary representation as there are only two economic stakeholder groups — retail customers and equity holders.
The shareholders claim the Unsecured Creditors Committee (UCC) is focused on ensuring that retail customers get maximum value without considering equity holders. It means no one adequately represents Equity holders’ interests, and any reorganization plan might affect their interests.
Evidence of this is Celsius’ claim that the “UCC is (its) partner, and these cases are all about the customer.”
The equity holders said they:
“Urgently require their fiduciary — with the access, standing, and resources equal to those enjoyed by the UCC — to represent their interests.”
These shareholders participated in a $750 million funding round months before Celsius filed for bankruptcy.
Shareholders want Celsius to ‘dollarize’ its retail crypto holding
Another notable aspect of the motion is that the shareholders want Celsius to “dollarize” the crypto holdings of its customers.
According to the filing, Celsius’ intention to return customers’ crypto instead of the fiat value of the asset is in contravention of the Bankruptcy Code, and it “could negatively impact the Equity Holders’ recovery.”
If this motion is accepted, any increase in the value of cryptocurrencies during the proceedings will likely go to the equity holders.
A hearing on the filing is set for Oct. 6, the same day court appearance and claim processes are expected to begin. However, objections to the motion can be submitted until next week.
Celsius IOU tokens
A recently leaked audio file suggests that Celsius might plan to repay its creditors using crypto IOU tokens.
In the leaked audio recording of a meeting, the firm’s chief technology officer and co-founder Nuke Goldstein said the company plans to wrap each customer’s debt into an IOU token that “represents the ratio between how much we really owe and how much we have.”
Another leaked phone call reveals that Celsius CEO Alex Mashinsky has shared the idea with the UCC and got a positive reaction.
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Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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Celsius Network
Celsius Network is a bankrupt cryptocurrency lending company that was founded in 2017 and headquartered in Hoboken, New Jersey.
Alex Mashinsky, born in 1965 in the Soviet Union to a Jewish family, moved to Israel in the 1970s.
