Weekly Crypto Standouts: CEL’s 339% Surge, BNX’s 15% Decline

September 23, 2024 Bitcoin.com

Tether Slams Celsius Network’s ‘Baseless’ $2 Billion Lawsuit

August 12, 2024 Bitcoin.com

Failed Crypto Lender Celsius To Create New Company for Creditors as US Judge Approves Bankruptcy Plan

November 11, 2023 The Daily Hodl

Bankrupt Digital Asset Lender Celsius Plans To Repay $2,000,000,000+ in Crypto to Creditors Before End of 2023

October 4, 2023 The Daily Hodl

Celsius creditors vote in favor of reorganization plan

September 26, 2023 Coin Telegraph

Alex Mashinsky

The majority of Celsius creditors have voted in favor of a plan that will see approximately $2 billion worth of Bitcoin and Ethereum returned to creditors.

The creditors involved in the Celsius bankruptcy case have voted in favor of a plan that will see funds returned to them as well as distributing equity through a new company.

According to a Sept. 25 filing from bankruptcy firm Stretto, most of the classes voted in favor of the plan by more than 98%.

The voting results are in! Over 95% of creditors across all eligible classes voted to accept the Plan, a testament to our collaborative efforts during Chapter 11. https://t.co/9Z5xlBhNts @CelsiusUcc @FahrenheitHldg.
— Celsius (@CelsiusNetwork) September 25, 2023

While voters have made a near-unanimous decision on the plan, the plan still needs final approval at a confirmation hearing in the United States Bankruptcy Court for the Southern District of New York scheduled for Oct. 2.

*Celsius network creditor class vote breakdown. Source: Stretto*

According to a disclosure statement filed on Aug. 17, the current plan will see approximately $2 billion worth of Bitcoin (BTC) and Ether (ETH) redistributed to Celsius Network creditors. The plan will also distribute equity in a new company, temporarily dubbed “NewCo.”

“NewCo will operate and further build out the Debtors’ Bitcoin mining operations, stake Ethereum, monetize the Debtors’ other illiquid assets, and develop new, value-accretive, regulatory-compliant business opportunities," it wrote.

Notably, the new company will be managed by the Fahrenheit Group — a consortium of crypto-native individuals and organizations including former Algorand CEO Steven Kokinos, venture capital firm Arrington Capital, crypto miner US Bitcoin Corp, Proof Group Capital Management and Arrington Capital advisor Ravi Kaza.

Celsius Network was one of the first major casualties of the 2022 bear market, with the now-defunct crypto lender filing for bankruptcy on July 14, 2022.

On July 13, 2023, the SEC sued Celsius and its former CEO Alex Mashinsky for allegedly raising billions of dollars through unregistered and fraudulent offers involving “crypto asset securities.”

Mashinsky was then arrested on the same day, following an indictment from the U.S. Department of Justice, which accused the former CEO of fraudulent financial activity, misleading investors and a number of other similar charges.

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Celsius Network files ‘adversary complaint’ against EquitiesFirst

September 7, 2023 Coin Telegraph

Alex Mashinsky

Bankrupt crypto lender Celsius Network is attempting to recover assets from a private lender called EquitiesFirst Holdings, which reportedly owes $439 million in cash and crypto.

Bankrupt crypto lender Celsius Network has filed a complaint against lending firm EquitiesFirst Holdings in a bid to recoup assets.

According to a sealed adversary complaint filed on Sept. 6, Celsius is seeking injunctive relief and a declaratory judgment associated with the "recovery of money/property" — according to the title of the docket.

The filing named both EquitiesFirst and its CEO Alexander Christy as defendants. Additionally, Celsius filed a summons on the same day, requiring that the private lender provide a motion or answer within 35 days.

*The sealed adversary complaint filed against EquitesFirst Holdings. Source: Stretto*

EquitiesFirst Holdings is an Indianapolis-based private lending company that reportedly owed Celsius Network $439 million as of July 2022.

Celsius first began taking collateralized loans from EquitiesFirst in 2019 to “support its operations” owing to what Alex Mashinsky described in a subsequent bankruptcy filing as a “lack of institutional lending available to cryptocurrency companies,” at the time.

However, in July 2021, Celsius Network sought to retrieve the collateral it had pledged to EquitiesFirst but was informed that the lender could not return the amount Celsius had provided.

As of July 2021, Celsius was owed a total of $509 million by EquitiesFirst. The increase from $439 million to $509 million was due to the loans being over-collateralized. Since September 2021, the debt has been slowly repaid at a rate of $5 million per month.

As of July 2022, EquitiesFirst owed Celsius $439 million, with the debt being comprised of $361 million in cash and 3,765 Bitcoin (BTC).

Celsius Network was among the major casualties of the 2022 bear market, filing for Chapter 11 bankruptcy protection on July 14, 2022.

Celsius’ former CEO Alex Mashinky was arrested on July 13 this year, with authorities accusing him of misleading Celsius users and defrauding investors out of billions of dollars.

Notably, The Federal Trade Commission issued Celsius with $4.7 billion in fines for allegedly “duping” users, but suspended the judgement in order for the platform to use the assets as part of its bankruptcy proceedings.

Celsius creditors are currently voting on a settlement plan that — if approved — would see a consortium called Fahrenheit buy Celsius’ assets and return Celsius creditors funds by way of launching a new company.

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US Court Seizes Alex Mashinsky’s Bank Accounts and Texas House: Unsealed Order

September 6, 2023 The Daily Hodl

CFTC investigators conclude ex-Celsius CEO Mashinsky broke US rules: Report

July 6, 2023 Coin Telegraph

Alex Mashinsky

If the majority of CFTC commissioners agree with that conclusion, the regulator could file a case in federal court.

Investigators from the Commodity Futures Trading Commission have reportedly determined that bankrupt crypto lender Celsius and its former CEO Alex Mashinsky broke a number of U.S. rules before the company's implosion.

According to a July 5 report from Bloomberg, attorneys from the CFTC's enforcement division found that Celsius misled investors, failed to register with the regulator and that Mashinsky broke a number of regulations, citing people familiar with the matter.

If the majority of the CFTC commissioners agree with the investigators’ findings, the agency could file a case against the collapsed crypto lender in U.S. federal court as early as this month, according to the sources.

The CFTC investigators' findings add to a growing pile of regulatory action against the now-defunct crypto lending platform. The New York Attorney General sued Mashinsky on Jan. 5, alleging that the former CEO misled investors and caused billions of dollars in losses.

I'm suing the former CEO of cryptocurrency platform @CelsiusNetwork for defrauding investors out of billions of dollars.

Alex Mashinsky lied to people about the risks of investing in Celsius, hid its deteriorating financial condition, and failed to register in New York.
— NY AG James (@NewYorkStateAG) January 5, 2023

On June 16 last year, securities regulators from five different U.S. states opened an investigation into Celsius three days after the firm abruptly halt ed user withdrawals on June 13.

The Securities and Exchange Commission (SEC) along with federal prosecutors from Manhattan also launched a series of probes into the firm, according to May court filings. Bloomberg notes that both the SEC and representatives from the U.S. Attorney's Office for the Southern District of New York have declined to comment on the status of the investigations.

Cointelegraph contacted the CFTC and Alex Mashinsky but is yet to receive a response.

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Core Scientific moves for September bankruptcy exit, expects $46M boost

May 24, 2023 Coin Telegraph

Core Scientific moves for September bankruptcy exit, expects M boost

$46 million

Core Scientific said favorable market conditions have increased its liquidity position and its bankruptcy restructuring plan has been revised.

A restructuring plan for bankrupt Bitcoin (BTC) miner Core Scientific could be finalized by September and it expects to exit proceedings with an additional $46 million due to recent favorable market conditions.

In a May 22 filing in a Texas Bankruptcy Court, Core Scientific’s lawyers said its liquidity position has improved considerably since it filed for bankruptcy and as a result, it plans to file a reorganization plan in the near future.

The plan is currently being negotiated with key stakeholders, and according to the filing, the firm is “seeking to build as much consensus as possible” about how a new Core Scientific would look after emerging from its bankruptcy proceedings.

*The next steps in Core Scientific’s Chapter 11 proceedings. Source: Stretto*

A Chapter 11 bankruptcy allows a firm to continue operating until stakeholders are able to agree on a restructuring plan which could involve measures such as the downsizing of business operations to reduce debt or the liquidation of assets to repay creditors.

The firm pointed to decreasing power costs, increasing Bitcoin prices and an increase in the blockchain’s hashrate as the primary market factors contributing to its liquidity boost.

*Core Scientific’s initial liquidity estimates vs current. Source: Stretto*

On Dec. 21, 2022, when Core Scientific filed for bankruptcy, Bitcoin’s price was $16,904, according to CoinMarketCap. Since then, the price has shot up by over 60%, currently sitting at around $27,000.

Additionally, power prices have decreased by 24% since the petition date according to the filing, while the network hashrate has jumped by 54%.

As a result of more favorable market conditions, Core Scientific estimates it will have an additional $46 million in funds once a restructuring plan is finalized, despite delays in the bankruptcy proceedings.

The miner is also expecting a significant windfall from Celsius Network claiming the bankrupt crypto lender owes it some $11 million.

The two firms are currently engaged in a lengthy court battle that began on Oct. 19, 2022, when Core Scientific first accused Celsius of failing to pay its power bills.

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‘Unjustly enriched:’ Core Scientific knocks back $4.7M claim from Celsius

May 9, 2023 Coin Telegraph

‘Unjustly enriched:’ Core Scientific knocks back .7M claim from Celsius

Bitcoin

Core Scientific has rejected a multi-million-dollar administrative claim from Celsius Network, arguing it's owed an even higher amount from the crypto lender.

Bankrupt Bitcoin (BTC) mining firm Core Scientific has objected to paying a $4.7 million administrative claim put forward by crypto lender Celsius Network, leading to a battle between the firms over contractual obligations.

According to the objection, which was filed in Texas bankruptcy court on May 5, Core Scientific has asked that Celsius Network’s $4.7 million administrative claims be rejected as the firm cannot prove it is entitled to one.

“Celsius’ request for allowance and immediate payment of the Celsius alleged admin claim ignores that Core has substantial claims against Celsius, which Core believes exceed the Celsius alleged admin claim,” wrote the objection.

For context, Core first signed a contract with Celsius in 2020 to host its cryptocurrency holdings in Core’s data centers. However, due to an increase in the price of power, Core passed these additional costs on to Celsius, an allowance that was reportedly stipulated in the original contract.

*Core Scientific’s 2020 contract with Celsius Network. Source:* *Court Filing*.

Despite Celsius initially paying these costs, the crypto lender ceased payments after it filed bankruptcy, Core Scientific claimed in the objection.

“If anyone has been unjustly enriched here, it is Celsius,” wrote Core Scientific in the objection. According to the now-defunct Bitcoin miner, Celsius has been “sitting on almost $8 million of money it owes to Core'' due to a “blatant post-petition violation” of the agreed-upon dispute resolution mechanism.

In total, Celsius now allegedly owes Core Scientific approximately $11 million, a sum that accrues an additional $28,000 in fees and interest with each passing day, the Bitcoin mining firm's lawyers argued.

The conflict between the two firms has been raging since Oct. 19, when Core Scientific first accused Celsius of failing to pay its power bills, citing the non-payments as a significant factor in the liquidity issues that led to the embattled Bitcoin miner filing for Chapter 11 bankruptcy on Dec. 21.

“The millions of dollars Celsius shortchanged Core after Celsius’s bankruptcy filing plus the millions of dollars in litigation…significantly contributed to Core’s liquidity drain and eventual chapter 11 filing.”

On Dec. 28, Core Scientific filed a motion seeking approval to reject Celsius’ contracts, claiming the firm’s failure to pay its power bills constituted a material breach of contract. On Jan. 3 Celsius agreed to let Core Scientific shut down more than 37,000 Bitcoin mining rigs the miner was hosting for the crypto lender.

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celsius network