Bankrupt Lender Celsius to Combine “Bogus” UK and US Entities

Bankrupt crypto lender Celsius Network plans to merge its United Kingdom and United States entities as new court filings allege the difference between the two platforms was in name only, Cointelegraph reported.

At the heart of the dispute is a decision the lender made in 2021, after the UK Financial Conduct Authority ordered it to stop operating in the country. The lender responded by setting up Celsius Network, a Limited Liability Company, in the US state of Delaware with the aim to transfer its assets there.

Intercompany chaos

The merger of the two entities led to “chaos” according to the firm’s May 1 court filing, which adds that it took months to prepare the official documents of the intercompany relationship. What’s more, the transactions the agreements affected remained unclear.

Celsius creditors attack merger

The Celsius Official Committee of Unsecured Creditors (UCC) also filed documents with the court, according to which the merger was a “sham.” In its opinion, the respective transactions made it possible to transfer billions worth of funds between the two entities, and the transfers were probably fraudulent.

Double standard

A US bankruptcy judge found that Celsius clients only had claims against the US entity. This means its more sophisticated investors, Series B, are more likely to be compensated than the others, who did not have a clear grasp of what the division of entities meant.

Coinbase, Gemini among candidates to buy out Celsius assets

Celsius’ remaining assets will be auctioned off today, May 3. Among the candidates to take possession of them are Coinbase and Gemini.

NovaWulf Digital Management is setting the bar for the bids. They have proposed a direct cash contribution in the amount of $45-$55 million. Clients can expect to get up to three-fourths of their funds back if NovaWulf’s proposal is accepted.