Celsius eyes merge of entities as creditors claim distinctions were a ‘sham’

Discontinued cryptocurrency lender Celsius Network is considering merging its UK and US entities. That’s because new court filings claim the supposed distinction between the two companies is “bogus.”

The central point of controversy focuses on decisions made by cryptocurrency lenders in June 2021. At this time, Celsius Network Limited (CNL) was warned by the UK Financial Conduct Authority to cease operations in the UK.

To avoid impact, CNL considered forming Celsius Networks LLC, a limited liability company in Delaware, and transferring its assets to the new company.

1) #Celsius They left the UK because they were offering illegal securities and were under pressure from the UK Securities Regulatory Authority (FCA). Yes, securities laws exist outside the United States. pic.twitter.com/2bu3uJq9Fr

— Simon Dixon (@SimonDixonTwitt) December 29, 2022

According to the May 1 Court filing From the now bankrupt crypto firm, the transition of the two entities “caused confusion between the companies”. It added that it “remained ambiguous” as to what kind of transactions were affected.

The filing argues that for everyday investors, the outcome of this sale is incomprehensibly confusing, but more “sophisticated” Series B investors may not understand the implications of such questionable record keeping. I knew him well.

As a result, the two entities should be treated as one and the same in subsequent bankruptcy proceedings, with smaller creditors being ignored in favor of Series B investors in terms of recovery and return of lost funds. this is not allowed.

According to the corresponding court filing According to the Celsius Official Commission of Unsecured Creditors (UCC), the transition was “fake” and the transaction that facilitated the transfer of billions of dollars worth of assets between the two sides was likely a fraud.

Simon Dixon, who reportedly lost $8.8 million worth of Bitcoin (BTC) as a result of the Celsius collapse, summed up the UCC filing in a series of tweets on May 2, stating: It acted as if it hadn’t happened,” adding that there was “poor documentation” and “no clear distinction” to distinguish between the two entities.

UCC Arguments for Substantial Integration and Consolidation #Celsius motion. They claim that CNL and LLC are always the same entity and that the entire transfer from CNL to LLC is fake. Creditors and Celsius themselves believe that CNL and LLC are functionally the same. I was. They said CNL was…

— Simon Dixon (@SimonDixonTwitt) May 2, 2023

In the memorandum of March 9 opinion, Chief U.S. Bankruptcy Judge Martin Glenn found that the customer has claims only against Celsius’s Delaware-based LLC. This means Series B investors are more likely to receive rewards.

Related: Celsius Creditors Call for Transparency on ‘Suspicious’ FTX Transactions

An auction for the remaining Celsius assets is set to take place on Wednesday, May 3, with a number of major companies, including exchanges Coinbase and Gemini, vying for ownership of the defunct company’s assets.

NovaWulf Digital Management now positions itself as a ‘stalking horse bidder’. NovaWulf’s proposal includes direct cash contributions ranging from $45 million to his $55 million. Customers can expect to recover up to 70% of their funds if NovaWulf’s offer is accepted.

The auction marks an important step for Celsius customers to recover their funds after the company files for Chapter 11 bankruptcy protection on July 14, 2022.

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