Celsius Network has initiated an ‘Adversary Complaint’ against EquitiesFirst. In a bankruptcy ordeal, the defunct crypto lender is striving to reclaim assets from this private lender. The entity in question, EquitiesFirst Holdings, allegedly holds an outstanding debt totaling a significant $439 million. This sum comprises both cash and cryptocurrencies.
The insolvent Celsius Network has taken legal action by filing an adversary complaint against the lending entity, EquitiesFirst Holdings. The objective is to secure injunctive relief and a declaratory judgment for the retrieval of monetary assets.
The complaint has been brought against both EquitiesFirst Holdings as an organization and its CEO, Alexander Christy, as individual defendants. Simultaneously, Celsius Network issued a summons, requiring the private lending institution to respond within 35 days.
Celsius Network’s Pursuit of Assets from EquitiesFirst Holdings
EquitiesFirst Holdings, a private lending company headquartered in Indianapolis, is purported to owe a staggering $439 million to Celsius Network. This information is based on financial records up to July 2022.
Celsius Network initially initiated secured loans from EquitiesFirst in 2019. This was to support its operational activities, driven by the perceived scarcity of institutional lending options for cryptocurrency enterprises at the time. These assertions were made in a subsequent bankruptcy filing by Alex Mashinsky, the then-CEO of Celsius Network.
However, in July 2021, Celsius Network initiated the process to recover the collateral it had earlier pledged to EquitiesFirst. They were then informed that the lender was unable to restore the total sum initially furnished by Celsius.
By July 2021, the outstanding obligation from EquitiesFirst to Celsius reached a substantial $509 million. This increase from $439 million to $509 million was attributed to the over-collateralization of loans. Since September 2021, the debt has been gradually retiring. It does so at a rate of $5 million per calendar month.
By July 2022, EquitiesFirst’s indebtedness to Celsius Network stood at $439 million, comprising $361 million in liquid currency and 3,765 Bitcoin units.
Celsius Network’s Adversary Complaint: Intricacies and Implications
Celsius Network found itself among the notable casualties of the bear market of 2022, culminating in the initiation of Chapter 11 bankruptcy protection on July 14, 2022.
A significant development transpired when Alex Mashinsky, the former CEO of Celsius, faced apprehension on July 13 of the same year, with authorities levying allegations of deceiving Celsius users and perpetrating investor fraud amounting to billions of dollars.
It is worth highlighting that the Federal Trade Commission imposed hefty fines totaling $4.7 billion on Celsius Network for ostensibly “hoodwinking” its user base. However, the judgment was temporarily suspended to enable the utilization of these assets as part of the bankruptcy proceedings.
Currently, the stakeholders of Celsius are in the midst of voting on a settlement proposal. If endorsed, this proposal would entail the acquisition of Celsius’ assets by a consortium known as Fahrenheit, which, in turn, aims to reimburse Celsius’ creditors by establishing a fresh corporate entity.
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