Celsius Network Files Complaint Against EquitiesFirst in Bankruptcy Case
Recently, Celsius Network, a crypto company that faced bankruptcy in July 2022, has taken legal action against EquitiesFirst, a private lending platform. The objective is to recover assets that were lost during the bankruptcy process. This move was made evident in a sealed bankruptcy document filed by Celsius on September 6. The document seeks injunctive relief and a declaratory judgment related to the recovery of money and property.
Celsius’s co-founder and former CEO, Alex Mashinsky, was arrested earlier this year on charges of fraud. The U.S. attorney’s office in Manhattan charged Mashinsky with multiple criminal counts, including securities, commodities, and wire fraud. As a result, a court filing on September 5 ordered the freezing of Mashinsky’s assets, including bank accounts in various financial institutions.
Furthermore, Celsius filed a separate summons on the same day, requesting EquitiesFirst to respond to the complaint within 35 days. This legal action is a significant development in the ongoing bankruptcy case.
EquitiesFirst’s Debt to Celsius: $439 Million
According to a report by the Financial Times in 2022, EquitiesFirst owes Celsius Network a staggering $439 million. This debt represents a substantial portion of Celsius’s assets, which thousands of its customers are relying on to recover their lost savings. EquitiesFirst has been repaying Celsius $5 million per month in both cash and Bitcoin.
Details of this debt emerged in Celsius’s bankruptcy filing, where the company disclosed its liabilities and assets. Currently, creditors of Celsius Network are voting on a bankruptcy-escape plan that involves selling assets to the Fahrenheit consortium. If approved, creditors could expect to recoup 67% to 85% of their holdings. The outcome of this vote will have a significant impact on the future of Celsius and its stakeholders.
Hot Take: The Legal Battles and Debt Crisis of Celsius Network
The ongoing legal battles and debt crisis involving Celsius Network and EquitiesFirst highlight the risks and challenges inherent in the crypto industry. It serves as a reminder that even prominent companies in the field are not immune to financial difficulties and fraud allegations. The outcome of these legal proceedings will not only impact the parties involved but also have broader implications for the crypto community. It emphasizes the importance of due diligence and risk management when engaging with crypto assets. As the industry continues to evolve, regulatory frameworks and safeguards need to be strengthened to protect investors and promote trust in the market.
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