Celsius Network Files “Adversary Complaint” Against EquitiesFirst Holdings
Celsius Network, a bankrupt crypto lender, has taken legal action against EquitiesFirst Holdings by submitting an “adversary complaint.” This move comes as Celsius tries to recover assets from EquitiesFirst, which reportedly owes them $439 million. The debt includes $361 million in cash and 3,765 BTC as of July 2022.
EquitiesFirst: The Enigmatic Debtor to Celsius
In the filed complaint, Celsius seeks injunctive relief and a declaratory judgment to recover money and property. EquitiesFirst and its CEO, Alexander Christy, are named as defendants. EquitiesFirst, founded in 2002, specializes in long-term asset-backed financing and ventured into crypto-collateralized loan services in 2016. Celsius sought financial assistance from EquitiesFirst to support its operations, but their overcollateralized crypto loan faced difficulties by 2021.
News emerged in July that EquitiesFirst was the mysterious debtor to Celsius, owing $439 million to the troubled firm.
In addition to the adversary complaint, Celsius also submitted a summons, mandating EquitiesFirst to respond within 35 days.
A Year After Bankruptcy
During the cryptocurrency market’s sharp decline last year, Celsius suffered and filed for Chapter 11 bankruptcy protection in July 2022. A year later, co-founder and former CEO Alex Mashinsky was arrested, facing charges of securities fraud and manipulation of the company’s CEL token.
The Federal Trade Commission imposed a $4.7 billion fine on Celsius for allegedly deceiving users, temporarily halting the judgment to incorporate funds into the bankruptcy proceedings.
In August, Judge Martin Glenn of the Southern District of New York Bankruptcy Court approved a motion allowing Celsius creditors to vote on a proposed settlement plan. If approved, a consortium called Fahrenheit would acquire Celsius’s assets and reimburse creditors through the establishment of a new company.
Hot Take
The legal battle between Celsius Network and EquitiesFirst Holdings sheds light on the complexities and risks within the crypto lending industry. It serves as a reminder for crypto investors to thoroughly research and understand the institutions they entrust with their assets. Additionally, the ongoing bankruptcy proceedings of Celsius Network highlight the need for regulatory frameworks to protect users and ensure transparency in the crypto space.
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