Crypto lender Celsius mulls possible restructuring amid financial woes

[PrimeNumber7]

It would probably be better if anyone who is potentially at risk of having funds "clawed back" by the Celsius bankruptcy estate to seek individualized advice from an attorney. Joining a telegram group is not going to have many upsides, and there is the risk that you will be known as someone who owns(owned) a large amount of crypto.

I think the risk of having funds clawed back is real, especially for those who have withdrawn large amounts of coin before the bankruptcy filing. It is very well possible that the bankruptcy trustee will decide that pursuing clawback claims is not worth the additional expense, as litigation is not cheap. Hence, why it is best to seek individualized legal advice.

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[JayJuanGee]

It would probably be better if anyone who is potentially at risk of having funds "clawed back" by the Celsius bankruptcy estate to seek individualized advice from an attorney. Joining a telegram group is not going to have many upsides, and there is the risk that you will be known as someone who owns(owned) a large amount of crypto.

I think the risk of having funds clawed back is real, especially for those who have withdrawn large amounts of coin before the bankruptcy filing. It is very well possible that the bankruptcy trustee will decide that pursuing clawback claims is not worth the additional expense, as litigation is not cheap. Hence, why it is best to seek individualized legal advice.

I am not completely against the idea of "legal counsel" or even the counsel of a professional "accountant"  or even the counsel of a professional psychologist, but we can also study into the laws and practices and to figure out some of these standards for our lil selfies, especially if we have some value at stake then we may well be more motivated to look into specifics as they pertain to our situation and we also may be more willing to share our findings with other people.. including in forums like this.. .. and there are surely public legal (bankruptcy) standards related to these kinds of matters, and I would consider that a lot of bitcoiners are somewhat self-help kinds of people that have brains for themselves.. and sure not everyone has a brain that functions well.. but still..   some of folks might already have access to attorneys and consultants, but some of them are able to figure out these kinds of matters for themselves including looking at the relevant laws, looking at their own circumstances (including where they are located and how much value that they may have taken out over the past 90 days and what were the circumstances of their having had removed such value) calculating how probable it might be that they might even receive a clawback notice... and even already have a plan in place, in the event that they do receive a clawback notice.. even if such clawback notice might well never come.

I am not opposed to getting legal advice if the circumstances might be complicated or if amounts at issue might be large and/or if the person might be in a jurisidiction in which it would be easy to serve legal notice and especially if someone has been served a clawback notice then it would become more important to act upon the receipt of such notice.. but some people might be smart enough to know what to do, how to prepare, what to research into without even having to seek "professional help".. and whether to cooperate with such claw back notice if it were to come depending on their own circumstances... or to address the clawback matter once notice is served, and if such a thing were to even be served.  

I am part of this forum and participate in this forum because I believe that there is value in learning and sharing information with forum members, and I am not as excited about referring members to outside locations (such as a telegram group).. and in that regard, I have my doubts regarding how private telegram may be.... but I don't know and then also, sure I may agree with you PrimeNumber7 that even if we do get into actual legal strategizing, then we are then going to be strategizing with a lawyer and/or accountant rather than posting any of our specific legal strategies on a public forum unless we believe that we are somewhat anonymous and we are not necessarily revealing too much of our personal details or circumstances or giving ourselves away more than necessary.  

For sure it should be seen as a problem that there is already a public list of Celsius names and other details.. so surely that causes issues with real names (or whatever name a Celsius account holder may have used in terms of his/her Celsius account).

Furthermore, if many folks are scared that "maybe I will get a clawback notice?" and no such clawback notice is even pending or even likely, they might be getting very worked up about something that is not likely to happen, they may well not need to seek legal help, help from an accountant or even psychological help.. and they may well be able to figure out some of these strategy matters by sharing information on forums and also by looking up information, too.... and merely having some supra $10k transactions in the past 90 days or amounts that add up to $10k would hardly even worry quite a few people.... .. so yeah there are some devils in the details kinds of considerations that could cause clawback notices to be more likely for some people versus others.

[PrimeNumber7]

My biggest concern about the telegram group is that it may be intended to get the person information of people who have large amounts of coin. I don’t necessarily have any problem with people sharing information with one another via the forum or some other medium. However when it comes to legal liability, sharing information can sometimes be harmful to you because it may make you a target, or you may expose information that would make a plaintiff believe you have assets to pay a judgement for example.

With regard to clawbacks in the Celsius case, if hiring a lawyer would be a financial burden, chances are that you don’t have much to worry about because a lawsuit by the bankruptcy estate won’t be economical.

[JayJuanGee]

My biggest concern about the telegram group is that it may be intended to get the person information of people who have large amounts of coin. I don’t necessarily have any problem with people sharing information with one another via the forum or some other medium. However when it comes to legal liability, sharing information can sometimes be harmful to you because it may make you a target, or you may expose information that would make a plaintiff believe you have assets to pay a judgement for example.

With regard to clawbacks in the Celsius case, if hiring a lawyer would be a financial burden, chances are that you don’t have much to worry about because a lawsuit by the bankruptcy estate won’t be economical.

In the end, I probably don't really disagree with you on any of this, and I think that I was initially triggered by Roccker's referring members off of the forum.

[uneng]

Now I'm just waiting for an update. I've received a physical letter from Stretto containing how much I had in Celsius and the status of my claim appears as "General Unsecured". As I understood it's everything ok and I don't have to fill any other claim. They also mention the deadline announcement (January 03, 2023), although the thieves from Celsius want to postpone the deadline.

Besides that, there is a complete manual with every other details about the claim (who needs to fill it, how to, where to, who doesn't need...), more informations about the deadline, who are the debtors (total of 8 Celsius' companies) and every respective addresses and phone numbers.

I don't know if Simon Dixon on Twitter is being optimistic, but he says we can expect more than 50% of our funds back in 6 months. However, Celsius can't have a reorganization plan permission from the judge.

[mescalito]

I don't know if Simon Dixon on Twitter is being optimistic, but he says we can expect more than 50% of our funds back in 6 months. However, Celsius can't have a reorganization plan permission from the judge.

That would be the 1st time I'd get non 0 value from a bankrupt crypto platform 

[bbc.reporter]

News update. The judge ruled that all the cryptocoins that were deposited in Celsius were the property of Celsius. The company does not need to send their depositors back their money thanks to what was written in their terms of use. This quite represents not your keys, not your coins.



A federal bankruptcy judge ruled cryptocurrencies deposited into interest-bearing accounts at Celsius Network, a now-bankrupt cryptocurrency lending platform, actually belong to the firm — thanks to the fine print.

The verdict gives Celsius ownership of the $4.2 billion in cryptocurrency that users deposited into its high-interest Earn program, according to a 45-page filing from the U.S. Bankruptcy Court in the Southern District of New York on Wednesday.

With the Earn program, Celsius allowed users to deposit cryptocurrencies like Bitcoin, Ethereum and Tether and receive weekly interest payments. Depending on the time horizon and token, the platform offered as much as 18% interest annually.

Source https://techcrunch.com/2023/01/04/bankruptcy-judge-rules-celsius-network-owns-users-interest-bearing-crypto-accounts/



Also, 18% interest annually, I am not quite certain what type of ponzinomics a centalized service used to pay for 18%, however, this is very common in Defi with autocompounding, velocking and other types of ponzinomics strategies.

[JayJuanGee]

News update. The judge ruled that all the cryptocoins that were deposited in Celsius were the property of Celsius. The company does not need to send their depositors back their money thanks to what was written in their terms of use. This quite represents not your keys, not your coins.

A federal bankruptcy judge ruled cryptocurrencies deposited into interest-bearing accounts at Celsius Network, a now-bankrupt cryptocurrency lending platform, actually belong to the firm — thanks to the fine print.

The verdict gives Celsius ownership of the $4.2 billion in cryptocurrency that users deposited into its high-interest Earn program, according to a 45-page filing from the U.S. Bankruptcy Court in the Southern District of New York on Wednesday.

With the Earn program, Celsius allowed users to deposit cryptocurrencies like Bitcoin, Ethereum and Tether and receive weekly interest payments. Depending on the time horizon and token, the platform offered as much as 18% interest annually.

Source https://techcrunch.com/2023/01/04/bankruptcy-judge-rules-celsius-network-owns-users-interest-bearing-crypto-accounts/

Also, 18% interest annually, I am not quite certain what type of ponzinomics a centalized service used to pay for 18%, however, this is very common in Defi with autocompounding, velocking and other types of ponzinomics strategies.

Wow.  Let's see where this goes, but it surely shows the importance for customers to read the terms of service - especially if the terms of service describe that the customers are giving up their claims to ownership over the principle, but were they also giving up claims of ownership over the purported yields?  I suppose until they actually cash out, the customer is not going to have ownership of nothing.. even though it seems that there was more than mere speculating that was going on with regards to what Celsius was doing with the deposits.. but if the terms of service says that they can do whatever the fuck they want, then the court will side with their terms of service... perhaps?  I doubt this is over, yet.. and actions that were either fraud or bordering on fraud might possibly still be relevant, yet of course, the judge would have considered those kinds of facts that were to show fraud, if such facts were to exist and if such facts that show fraud were to have been materially relevant in making the ruling, right? 

right?


right?

[uneng]

I doubt this is over, yet..

For most of us it's game over! Disgusting...

But for New York's investors there might be hope yet, because the state of NY is suing Mashinsky now.

https://twitter.com/NewYorkStateAG/status/1611023481285578752?t=VhRfgMXeVW7S9IDb1F9jog&s=19

and actions that were either fraud or bordering on fraud might possibly still be relevant, yet of course, the judge would have considered those kinds of facts that were to show fraud, if such facts were to exist and if such facts that show fraud were to have been materially relevant in making the ruling, right? 

right?


right?

This judge is siding with the scammers. The fraud was clear and the case easy to be solved. The judge, after a long time, decided to use a dirty, shady and malicious term and conditions' point as excuse to legitimate the scam, while completely ignoring Mashinsky withdrew funds (CEL tokens I think) right before the bankruptcy announcement. Remember he also tweeted asking a man to show evidence of a single user who was having issues to cashout from Celsius on the day before the freeze.

If it's not premeditated fraud, I don't know what it is anymore. The judge simply chose to turn a blind eye to this.

Congratulations to the scammers! They proved the crime worths! But from divine law they can't escape!

[ancafe]

Wow.  Let's see where this goes, but it surely shows the importance for customers to read the terms of service - especially if the terms of service describe that the customers are giving up their claims to ownership over the principle, but were they also giving up claims of ownership over the purported yields?  I suppose until they actually cash out, the customer is not going to have ownership of nothing.. even though it seems that there was more than mere speculating that was going on with regards to what Celsius was doing with the deposits.. but if the terms of service says that they can do whatever the fuck they want, then the court will side with their terms of service... perhaps?  I doubt this is over, yet.. and actions that were either fraud or bordering on fraud might possibly still be relevant, yet of course, the judge would have considered those kinds of facts that were to show fraud, if such facts were to exist and if such facts that show fraud were to have been materially relevant in making the ruling, right? 

right?


right?

It is almost certain that users will not get a refund after the company goes bankrupt, this company's work system is almost like a conventional bank because customers do not hold assets, more clearly what Celsius the company is trying to do is not attractive at all, because they use stablecoins in holding assets and the importance of reading the rules in full so that everything goes better before going any further.

For several reasons, it is very likely that users will become victims of the bankruptcy of the Celsius company, so that whatever form of assistance is provided, it will not affect the company's return.

[PrimeNumber7]

Wow.  Let's see where this goes, but it surely shows the importance for customers to read the terms of service - especially if the terms of service describe that the customers are giving up their claims to ownership over the principle, but were they also giving up claims of ownership over the purported yields?  I suppose until they actually cash out, the customer is not going to have ownership of nothing.. even though it seems that there was more than mere speculating that was going on with regards to what Celsius was doing with the deposits.. but if the terms of service says that they can do whatever the fuck they want, then the court will side with their terms of service... perhaps?  I doubt this is over, yet.. and actions that were either fraud or bordering on fraud might possibly still be relevant, yet of course, the judge would have considered those kinds of facts that were to show fraud, if such facts were to exist and if such facts that show fraud were to have been materially relevant in making the ruling, right? 

right?


right?

The ruling really doesn't change anything. It essentially means that any coin deposited to Celsius is an asset of Celsius, while a liability of a similar amount is also created. In other words, depositing coin on Celsius is a wash, although if Celsius is insolvent when (or after) the coin is deposited, the person depositing the coin would be receiving a liability worth less than the value of the coin they just deposited.

But for New York's investors there might be hope yet, because the state of NY is suing Mashinsky now.

https://twitter.com/NewYorkStateAG/status/1611023481285578752?t=VhRfgMXeVW7S9IDb1F9jog&s=19

There's no hope. The NYAG is not going to be able to recover any substantial amount of money, even if she wins in court.

[uneng]

But for New York's investors there might be hope yet, because the state of NY is suing Mashinsky now.

https://twitter.com/NewYorkStateAG/status/1611023481285578752?t=VhRfgMXeVW7S9IDb1F9jog&s=19

There's no hope. The NYAG is not going to be able to recover any substantial amount of money, even if she wins in court.

But keep in mind this is a new situation. NYAG is suing Mashinsky, not Celsius. They will go after Mashinsky's money and he will be banned from doing business in the state. Although this measure can only benefit local investors from the state, it can still work, why not?

[bbc.reporter]

News update.

Celsius next plan is to issue their own token and create a market for this to be traded and speculated. I am not quite certain if this will a type of ICO, however, they will certainly need to have whales to help them with the initial investment to pump then dump on the market.

It appears the people who will pay for Celsius way out of bankruptcy will be from the community.



Celsius is weighing a crypto bankruptcy token to pay back creditors in reorganization

Celsius is weighing a plan to repay creditors by issuing a new cryptocurrency, the lending platform said in a Tuesday court hearing.

Source https://markets.businessinsider.com/news/currencies/celsius-crypto-news-bankruptcy-creditors-token-repayment-bitfinex-court-2023-1

[o_e_l_e_o]

Hahaha what an absolute scam. "We gambled all your money away to make profit for ourselves. Now give us more money so we can gamble it too and try to make back what we lost. We will pay you back with a complete centralized worthless shitcoin that we can print out of thin air!"

Handing a single satoshi back to Celsius' centralized scam platform is just plain stupid. Doing it in return for a centralized bankruptcy shitcoin is absolute lunacy. If anyone falls for this, then I'm sorry, but you are a moron.

There are also potential legal issues here, in that by buying said shitcoin you could be classed as having accepted some kind of settlement deal from Celsius and therefore giving up your rights to taking legal action for your original coins that they scammed from you.

[bbc.reporter]

@o_e_l_e_o. They are following Bitfinex's tactic when it was hacked for much of their bitcoins in cold storage. The difference however, is Bitfinex had a community of loyal traders that supported the exchange and has shown this support through buying the tokens during the presale. This gave Bitfinex the cashflow to give the exchange more time to wait for the markets to pump and close the blackhole in their balance sheet. But I am not quite certain what type of magic was done by their accounting department hehehe.

[PrimeNumber7]

Based on the article, (and based on how bitfinex handled a similar situation), it looks like Celsius would issue one token to their creditors for each dollar the creditor is owed, and creditors would be able to sell the tokens on the open market to allow them to quickly recover something. I might compare this to a "normal" company allowing its bondholders to continue to trade a bankrupt company’s debt on the bond market, except in the case of celsius, there was no existing market prior to celsius filing for bankruptcy.

Presumably, celsius would also use a certain percentage of its operating income to repurchase these tokens at face value periodically. The article alluded to Celsius becoming a public company, so it may also be possible for tokenholders to convert their tokens to equity shares in Celsius at some predetermined value.

Celsius shouldn't be able to exit bankruptcy until all the tokens are disposed of, either via being redeemed at face value or being exchanged for equity. Although at one point, the bankruptcy court may mandate that token holders accept equity in exchange for their tokens.

I assume that hedge funds and others are currently trying to buy up bankrupty claims from creditors at below face value, so there are advantages to allowing for there to be an open market for these claims.

[uneng]

The scammers have 4.2$ billion under their disposal. They just have to be creative to continue buying more time through these useless recovery strategies, until they deplete all the funds available.

And considering that sum of money, it's a very decent amount to run a pump and dump scheme with a new worthless token, what doesn't make sense anyway, since they already had native CEL token, and still profiting the biggest part of that through their wealthy wages, after all!

Based on the article, (and based on how bitfinex handled a similar situation), it looks like Celsius would issue one token to their creditors for each dollar the creditor is owed, and creditors would be able to sell the tokens on the open market to allow them to quickly recover something. I might compare this to a "normal" company allowing its bondholders to continue to trade a bankrupt company’s debt on the bond market, except in the case of celsius, there was no existing market prior to celsius filing for bankruptcy.

Presumably, celsius would also use a certain percentage of its operating income to repurchase these tokens at face value periodically. The article alluded to Celsius becoming a public company, so it may also be possible for tokenholders to convert their tokens to equity shares in Celsius at some predetermined value.

Celsius shouldn't be able to exit bankruptcy until all the tokens are disposed of, either via being redeemed at face value or being exchanged for equity. Although at one point, the bankruptcy court may mandate that token holders accept equity in exchange for their tokens.

I assume that hedge funds and others are currently trying to buy up bankrupty claims from creditors at below face value, so there are advantages to allowing for there to be an open market for these claims.

Let's say they owe me $1000. So I will receive 1000 worthless tokens which nobody is going to buy for a single penny of dollar each, because this token doesn't have a practical reason to exist, besides scamming money from creditors.

The only solution was to sell all the assets and return the profit made to creditors in something with real price, like bitcoin or dollar currency. If depositors were able to get 40%-50% of their funds back it would be already considered a victory. Now I doubt someone is going to recover at least 10% of their holdings with this plan.

[o_e_l_e_o]

@o_e_l_e_o. They are following Bitfinex's tactic when it was hacked for much of their bitcoins in cold storage.

As you say, the difference here is that Bitfinex were still operating. As insane as I think it was for Bitfinex users to accept payment in a centralized shitcoin, at least Bitfinex had some kind of strategy to recoup their losses and pay back their users. Celsius have nothing except a scam coin built from the ashes of a scam exchange.

Let's say they owe me $1000. So I will receive 1000 worthless tokens which nobody is going to buy for a single penny of dollar each, because this token doesn't have a practical reason to exist, besides scamming money from creditors.

A very similar situation happened with Midas, which was yet another centralized platform which collapsed a few months ago. They "paid back" all their scammed users in their own centralized Midas token instead of the BTC and other coins they were owed. Everyone immediately dumped this worthless token and recovered very little, if anything, of what they were owed. Zoom out to three months on the chart and see if you can figure out just when this happened - https://coinmarketcap.com/currencies/midas/

[uneng]

Zoom out to three months on the chart and see if you can figure out just when this happened - https://coinmarketcap.com/currencies/midas/

Oh my God, it looks the view from the bottom of Grand Canyon!

[PrimeNumber7]

Based on the article, (and based on how bitfinex handled a similar situation), it looks like Celsius would issue one token to their creditors for each dollar the creditor is owed, and creditors would be able to sell the tokens on the open market to allow them to quickly recover something. I might compare this to a "normal" company allowing its bondholders to continue to trade a bankrupt company’s debt on the bond market, except in the case of celsius, there was no existing market prior to celsius filing for bankruptcy.

Presumably, celsius would also use a certain percentage of its operating income to repurchase these tokens at face value periodically. The article alluded to Celsius becoming a public company, so it may also be possible for tokenholders to convert their tokens to equity shares in Celsius at some predetermined value.

Celsius shouldn't be able to exit bankruptcy until all the tokens are disposed of, either via being redeemed at face value or being exchanged for equity. Although at one point, the bankruptcy court may mandate that token holders accept equity in exchange for their tokens.

I assume that hedge funds and others are currently trying to buy up bankrupty claims from creditors at below face value, so there are advantages to allowing for there to be an open market for these claims.

Let's say they owe me $1000. So I will receive 1000 worthless tokens which nobody is going to buy for a single penny of dollar each, because this token doesn't have a practical reason to exist, besides scamming money from creditors.

The only solution was to sell all the assets and return the profit made to creditors in something with real price, like bitcoin or dollar currency. If depositors were able to get 40%-50% of their funds back it would be already considered a victory. Now I doubt someone is going to recover at least 10% of their holdings with this plan.

The token would exist to repay creditors, and would represent a claim against Celcius' assets.

Celsius is currently in Chapter 7 liquidation bankruptcy, the idea is that it would change to Chapter 11 bankruptcy and would resume operations.

There are presumably already hedge funds, and other entities buying up claims from former customers, this token would make the pricing of the debt more transparent.