Celsius’ claims separation of US and UK operations was ‘sham’
According to newly filed documents, defunct crypto lender Celsius Network seeks to merge its UK and US operations, claiming their separation was a “sham.”
The operations that allowed the transfer of billions of dollars in assets between the two were likely fraudulent, according to a concurrent court filing by the Celsius’ official committee of unsecured creditors (UCC).
Therefore, in subsequent bankruptcy proceedings, the two entities should be treated as the same to ensure that smaller creditors are not discriminated against in favor of Series B investors regarding the recovery and return of lost funds.
The argument stems from the crypto lender’s plan to stop doing business in the United Kingdom in June 2021 after receiving a warning from the Financial Conduct Authority of that nation.
Celsius Network Limited (CNL) sought to move its assets to a newly formed Limited Liability Company (LLC) in Delaware to protect itself from legal action.
According to the lawsuit, the ordinary investors couldn’t understand the ramifications of this transfer because of the ambiguity, but the “sophisticated” Series B investors did.
On May 2, bitcoin investor Simon Dixon, who lost more than $8.8 million in the Celsius collapse, tweeted a summary of the UCC filing, writing. According to him, Celsius acted as if the migration had never occurred. It claimed that the company had provided him with “poor documentation” and “no clear distinctions” between the two companies.
Chief US Bankruptcy Judge Martin Glenn ruled in a memorandum decision on March 9 that consumers only have claims against Celsius’ Delaware-based LLC, increasing the likelihood that Series B investors would be repaid.
On May 3, an auction will be held for the remaining Celsius assets, with many large companies, including the exchanges Coinbase and Gemini, competing to acquire them.
NovaWulf Digital Management is the “stalking horse bidder,” a term for the first mover who establishes the baseline price for subsequent bids. In the region of $45 million and $55 million, NovaWulf proposes making a direct monetary contribution. Customers might expect to recoup up to 70% of their money if NovaWulf’s application is approved.