Gemini creditors revolt over ‘brutal’ Bitcoin slashing reorg plan

December 14, 2023 Coin Telegraph

Celsius seeks court approval to start repaying customers by year-end

October 3, 2023 Coin Telegraph

Bankruptcy

The embattled crypto lender is seeking final court approval for a restructuring plan that will start repaying creditors before the end of 2023.

Embattled crypto lender Celsius Network has told a judge it plans to start paying back its customers by year’s end, amid an Oct. 2 hearing seeking approval for its reorganization plan.

In his opening statements at the confirmation hearing in New York, Celsius’ legal counsel Christopher Koenig said the new company dubbed “NewCo” will emerge from the proceedings with $450 million in seed funding.

A filing on Sept. 29 shows that Celsius plans to partially repay its creditors using $2.03 billion in Bitcoin (BTC) and Ethereum (ETH) and stock in the new company.

#Celsius will distribute at least $2.03B of crypto to Creditors.
Meanwhile, NewCo will be seeded with up to $450 million in crypto.
— Celsius NewCo Community (@CelsiusNewCo) October 2, 2023

NewCo has been backed by a group of companies in a consortium called Fahrenheit LLC which will manage the mining and staking business.

The judge presiding over the case, Martin Glenn, is considering whether to approve Celsius’s restructuring plan. The plan will also need to be cleared by security regulators. Despite garnering an overwhelming majority of votes in favor, it is being challenged by some creditors, according to reports.

*Celsius plan highlights. Source:* *stretto.com*

“The Debtors arrive at Confirmation with a Plan that has the support of over 95% of voting Account Holders by both number and dollar amount,” Celsius stated in a filing presented at the confirmation hearing.

If the Celsius plan is approved, it would be one of the first failed crypto platforms from 2022 to be resurrected in a Chapter 11 bankruptcy case.

Celsius customers have been waiting to be made whole ever since the company halted withdrawals in June 2022 following the collapse of the Terra/Luna ecosystem.

Magazine: Simon Dixon on bankruptcies, Celsius and Elon Musk: Crypto Twitter Hall of Flame

Crypto lender BlockFi gets court nod to repay customers

September 26, 2023 Coin Telegraph

Blockfi

The approval is seen as a milestone moment for BlockFi's over 100,000 creditors, who have been long awaiting repayment.

The customers of bankrupt cryptocurrency lending platform BlockFi are one step closer to being paid out after a United States Bankruptcy Court in New Jersey approved its liquidation plan.

Bankruptcy Judge Michael A. Kaplan approved BlockFi's third amended Chapter 11 plan in a Sept. 26 court hearing, a filing on the same day shows.

*Sept. 26 court filing in the bankruptcy case of BlockFi. Source: Kroll*

The amount of repayment received by BlockFi's unsecured creditors will largely depend on whether BlockFi succeeds in its legal battle against FTX and other bankrupt cryptocurrency firms.

BlockFi's liquidation plan was approved after the firm settled a long-fought dispute with the creditors committee over the company’s senior management.

The now bankrupt lending platform blamed FTX's collapse for its own failure despite the creditor's committee citing concerns with BlockFi's relationship with FTX and its former CEO Sam Bankman-Fried.

Estimates show BlockFi owes up to $10 billion to over 100,000 creditors, including $1 billion to its three largest creditors and $220 million to bankrupt crypto hedge fund Three Arrows Capital.

This is a developing story, and further information will be added as it becomes available.

Magazine: What do crypto exchanges really do with your money?

Celsius creditors flag renewed phishing attacks ahead of bankruptcy plan

September 20, 2023 Coin Telegraph

Bankruptcy

Creditors of crypto lender Celsius Network have reported receiving a new flood of phishing emails, likely resulting from two data breaches last year.

Creditors from bankrupt crypto lender Celsius Network are again being targeted in a new wave of phishing attacks as the crypto lender’s bankruptcy proceedings enters its final stages.

Reports on social media over the past week have shown an increase in phishing attacks from scammers impersonating Stretto, the bankruptcy services platform for crypto lender Celsius and its creditors.

One user reported receiving three phishing emails claiming to be from Celsius on Sept. 18.

Others reported receiving fake emails with malicious links attempting to impersonate Stretto, the claims agent handling the bankruptcy case.

Beware of scam email (I received this phishing email -> the scam link shown is "case-stretto. com", not "https://t.co/ZGKIKrPjl1") https://t.co/JV7yUQ6X5e
— Better World (@Scam_is_sinful) September 18, 2023

The fake website, which drops an ‘s’ from the genuine URL, pops up a connect wallet prompt which when connected allows the scammers to drain the crypto asset contents.

One analyst and business manager said that phishing attacks were likely to increase as the Celsius bankruptcy proceedings approach its final stages. He advised taking precautions and double-checking links.

I expect phishing attempts to only increase as the celsius ch.11 approaches what appears to be the final stages. Creditors will be eager to make any final last-minute changes or confirm any alleged distributions. Be extremely cautious, links are bad, and take precautions.
— Keith (@ChazzonKe) September 18, 2023

In mid-August Celsius was authorized to start sending out ballots to its customers for a vote on a proposed settlement plan. Scammers are using this to ramp up phishing attacks around the voting deadline.

According to Simon Dixon, CEO and co-founder of the online investment platform BnkToTheFuture, the final date for voting was Sept. 18 with the report scheduled for Sept. 20, and a confirmation hearing slated for Sept. 29.

Celsius intends to seek final court approval of its restructuring plan on Oct. 2.

The @BankToTheFuture Investment Banking team have been working on some models to help #Celsius Creditors vote on the disclosure statement that I’ll share on YouTube soon. For now our team has put together a timetable of important events leading up to plan conformation. pic.twitter.com/3dQduMAofP
— Simon Dixon (@SimonDixonTwitt) July 12, 2023

The phishing attacks appear to stem from previous data breaches, including a Celsius Network email server breach in April 2021 that resulted in user details being leaked, which led to malicious emails to those users.

The embattled crypto lender revealed more of its customer data had been leaked in another third-party data breach in July 2022 which led to another wave of phishing attacks.

Customers of the crypto lender have been waiting to be made whole ever since Celsius halted withdrawals in June 2022 after the collapse of the Terra/Luna ecosystem. The crypto lender filed for bankruptcy the following month.

Magazine: Simon Dixon on bankruptcies, Celsius and Elon Musk: Crypto Twitter Hall of Flame

BlockFi argues FTX, Three Arrows Capital isn’t entitled to repayments

August 23, 2023 Coin Telegraph

Blockfi

BlockFi argues its creditors, not FTX’s, are the “ultimate victims” of FTX’s alleged fraud.

Bankrupt cryptocurrency lender BlockFi is trying to block attempts by the similarly bankrupt FTX and Three Arrows Capital (3AC) that aim to retrieve hundreds of millions of dollars to pay back their creditors.

BlockFi claimed in an Aug. 21 filing to a New Jersey bankruptcy court that its own creditors shouldn’t be pushed to the back of the line because FTX’s creditors were harmed by the exchange allegedly misappropriating $5 billion BlockFi lent it.

“FTX seeks to recover on over $5 billion of claims filed against the BlockFi estates at the direct expense of the ultimate victims of FTX’s fraud: BlockFi’s clients and other legitimate creditors.”

“To prevent further injustice to the creditors of BlockFi’s estates, the Court should disallow the FTX Claims under the doctrine of unclean hands,” BlockFi added.

FTX also provided $400 million to BlockFi in June 2022 in addition to buying BlockFi equity pursuant to a loan agreement, the filing stated.

However, BlockFi claimed it wasn’t a standard loan agreement — it was an unsecured, 5-year term that was well below market interest rates and repayments weren’t due until the firm would supposedly mature.

BlockFi referred to FTX’s investment as a “gamble” that BlockFi creditors shouldn’t be liable for.

“Just because FTX’s fraudulent actions caused FTX’s bet to fail does not mean BlockFi’s creditors are now somehow liable to refund the purchase price,” it argued.

*BlockFi suggested a* *loan from* *FTX was a “gamble” that the market would stabilize. Source: Kroll*

Estimates show BlockFi owes up to $10 billion to over 100,000 creditors including $1 billion to its three largest creditors and $220 million to bankrupt crypto hedge fund 3AC.

BlockFi claimed 3AC committed fraud with the money it borrowed and argued it also shouldn’t be entitled to a potential repayment.

BlockFi claims its litigation with FTX, 3AC and other firms could cost it up to $1 billion — impacting the amount its creditors are owed.

Several BlockFi creditors previously accused the firm of overlooking several red flags before transacting with FTX and its trading firm Alameda Research in the months prior to FTX’s collapse in November 2022.

Despite this, creditors settled with BlockFi last month to move forward with a repayment plan.

BlockFi filed for Chapter 11 bankruptcy on Nov. 28, about two weeks after FTX similarly filed for bankruptcy.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

Winklevoss slams DCG’s Silbert — Not even SBF was ‘capable of such delusion’

July 4, 2023 Coin Telegraph

Alameda Research

In an open letter, Cameron Winklevoss slammed DCG's Barry Silbert for allegedly playing the victim card while owing $1.2 billion to Gemini’s 232,000 Earn customers.

Crypto exchange Gemini founder and CEO Cameron Winklevoss is again threatening to sue Digital Currency Group and its CEO Barry Silbert over delays in the resolution of Genesis for its Earn customers while slamming the CEOfor allegedly trying to play the victim card.

In the July 3 “Open Letter to Barry Silbert,” Winklevoss alleged the DCG enterprise had engaged in “fraudulent behavior” via a “culture of lies and deceit” — which have come at the expense of Gemini’s 232,000 Earn users.

Earn Update: An Open Letter to @BarrySilbert pic.twitter.com/ErsYpcEjQD
— Cameron Winklevoss (@cameron) July 4, 2023

Among the accusations, Winklevoss’ strongly-worded letter alleges that Silbert intentionally delayed resolution through “abuse” of the mediation process, stating:

"Mediation has given DCG an indefinite forbearance on the $630 million it owes Genesis — for free."

Most disturbing, according to Winklevoss, has been Silbert’s apparent claim of being the “victim” in the debacle.

“It takes a special kind of person to owe $3.3 billion dollars to hundreds of thousands of people and believe, or at least pretend to believe that they are some kind of victim," said Winklevoss, adding:

Not even Sam Bankman-Fried was capable of such delusion.”

DCG’s Genesis was the lender behind Gemini Exchange's Earn program, a product that promised returns as high as 8% to depositors. However, on November 16, Genesis announced it temporarily suspended withdrawals citing “unprecedented market turmoil.” Genesis later filed for bankruptcy on January 19.

Genesis later filed for bankruptcy on January 19, with Gemini seeking to recover its share of the billions owed by Genesis to creditors since.

However, after what Winklevoss has described as multiple delays, he appears to have had enough.

“I write to inform you that your games are over,” Winklevoss said, explaining that professional fees have now “ballooned” to over $100 million at the expense of credits and Earn users. “Enough is enough.”

Winklevoss has now given Silbert an ultimatum, accept his firm’s “best and final offer” by 4 pm ET on July 6 — or face a lawsuit on July 7.

*The final offer to DCG as presented by Cameron Winklevoss. Source: Twitter*

The offer pitched calls on DCG to make a $275 million payment by July 21, an additional $355 million before July 21, 2025 and a final payment of $835 million by July 21, 2028 — five years from the "Plan Support Agreement” date proposed by Winklevoss.

The total payment will come to $1.47 billion.

Winklevoss wants the payments to be made in the form of Bitcoin (BTC) Ether (ETH) and the United States dollar (USD), with the funds sourced from Genesis Global Trading, potential payouts from FTX and Alameda Research’s bankruptcy estates in addition to Avalanche (AVAX) and Near (NEAR) tokens it may have a claim to from Three Arrows Capital’s bankruptcy estate.

Cointelegraph reached out to DCG for comment but did not receive an immediate response.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom