Most recently, Celsius has stated that the bankruptcy court has granted its motion to set the filing deadline for all consumers. The bar date has been set for January 3, 2023. All impacted investors must keep up with the latest developments to avoid being left out and missing out on the payout schedule.
The crypto lending entity stated that its claims representative, Stretto, will notify consumers regarding the bar date and the next steps in the proofs of claim procedure. Customers who consent to Celsius’s filing of their claims in the Schedules of Assets and Liabilities are exempt from submitting proof of claim.
Celsius’s financial mismanagement
There is new information regarding the crypto entity’s bankruptcy filing. On June 12th, Celsius formally announced the cessation of withdrawal. The entity subsequently filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York.
According to new reports, an independent examiner in the crypto lender’s bankruptcy case said that the company did not have “sufficient” accounting and operational controls in its handling of customer funds.
In an interim report released on November 19, the court-appointed examiner Shoba Pillay made a number of scathing observations on the insolvent crypto-lending business.
The inquiry conducted by Shoba revealed that errors made by the Celsius team led to the mixing of users’ wallet balances. The research revealed that mixing users’ wallets makes it uncertain whose cash belongs to which user.
One of the most significant disclosures in Pillay’s research was that Celsius’ Custody service was introduced without proper accounting and operational controls or technical infrastructure. Subsequently, this allowed for shortages in Custody wallets to be paid from the company’s other assets. The April 15 launch of the Custody program by the entity allowed users to transfer, swap, and use coins as loan collateral.
The interim investigation has also shed light on the reasons why the lending platform was ultimately obliged to restrict withdrawals on June 12. Pillay stated that the breaking point occurred on June 11, when the custody wallets of clients got underfunded. By the 24th of June, the shortfall was decreased to $50.5 million, a decrease of 24%.
Pillay stated that Celsius’ Custody and Withdrawal programs were developed quickly in response to intense regulatory pressure from New Jersey’s Bureau of Securities. Afterward, these probs began an investigation in mid-2021 into whether Celsius’ “Earn” accounts constituted securities under United States securities laws.
Other accounting irregularities highlighted in the report include the fact that the lending platform, created in 2017 by Alex Mashinsky and Daniel Leon, did not begin tracking its balance sheet until after its interaction with authorities in May of 2021. At this point, it began using Google Sheets.
In May of 2022, the collapse of the Terra ecosystem was one of the primary causes of Celsius’ financial troubles. Celsius also announced on November 20 that its next court session is planned for December 5, where they intend to further conversations regarding, among other items, its Custody and Withhold accounts.
Celsius sets the bar date
Customers have until January 3, 2023, to file a claim in the company’s bankruptcy proceeding. The bankruptcy court established the bar date as the last day creditors could submit proofs of claim against the collapsed crypto lender.
After this date, creditors who have not filed a claim might no longer be eligible for cash payouts. Celsius managed over $10 billion in assets at its peak and claimed to have over 1.7 million subscribers.
Customers should expect to receive a notice regarding the bar date and next steps in the proofs of claim process from our claims agent, Stretto, via email, physical mail for those customers with an address on file, and through a notification in the Celsius app.
Celsius
In addition, the next court date is scheduled for December 5, at which time additional custody and withholdings account arguments will be considered. In the current market environment, the promise of the Celsius network is identical to that of any other crypto platform: “that data and asset security remain a top priority for all.”
Celsius caught up in the Alameda-FTX saga
On Tuesday, the Crypto Loan Network informed the court that it owed $12 million to Alameda Research, the trading arm of Sam Bankman-cryptocurrency Fried’s company. This money, a portion of which is represented by locked SRM tokens held as collateral, is presumably currently involved in Alameda’s bankruptcy procedures.
This further complicates matters for Celsius’s creditors. A bank run disclosed a multibillion-dollar hole in FTX’s reserves, prompting it and approximately 130 other firms affiliated with Bankman-Fried to file for chapter 11 bankruptcy protection last week.
Chris Ferraro, Celsius’s new chief executive officer, said in court that the company’s outstanding loans were a source of post-bankruptcy revenue. However, he conceded that the bankrupt crypto lender’s current revenue is “obviously at a much lower clip than it was pre-filing, pre-pause.”
Source: https://www.cryptopolitan.com/must-read-for-all-celsius-victims/