Dixon

Celsius wants to extend the deadline for claims as lawyer fees mount

Administrative expenses from the bankruptcy proceedings have already topped $53 million, and continued delays are chipping away at Celsius’ estate.

Bankrupt crypto lender Celsius Network is planning to file a motion that would extend the deadline for users to submit their claims by another month.

The crypto community has started to grow impatient, noting that Celsius’ lawyer fees have continued to stack up and are eating away at the lender’s estate.

In a Dec. 29 tweet, Celsius announced that it would seek to extend the current deadline for claims from Jan. 3 to early February.

The bankruptcy court is set to hear the motion on Jan. 10, and according to Celsius, the Jan. 3 deadline will be extended until at least then.

Celsius is preparing to file a motion later this week requesting an extension of the bar date, which is the deadline to file a claim, from January 3, 2023, until early February.

— Celsius (@CelsiusNetwork) December 29, 2022

The claims process allows creditors who believe they have a right to payment to file claims during bankruptcy proceedings. Celsius’ creditors had made over 17,200 claims as of Dec. 29.

However, Celsius’ creditors appear antsy as Celsius’ administrative fees have continued to rack up since it first filed for bankruptcy in July. A Dec. 27 Financial Times report noted that the fees charged by bankers, lawyers and other advisers in the bankruptcy case had already reached $53 million.

As an example, a Dec. 15 fee statement from one of the law firms representing Celsius, Kirkland & Ellis, requested a fee of over $9 million for work done during the months of September and October.

In comparison, only $44 million has so far been earmarked by Celsius to be returned to customers. This money belongs to users who only ever held funds within the Custody Program, and represents a minority of the $4.72 billion of user deposits held by Celsius.

Some in the crypto community have been unimpressed with the latest postponement in the proceedings, alleging that it’s yet another “delay tactic.” For example, one user noted “Stop wasting time stop extending, just go on with proceedings and give me my money back!!!!” while another simply said: “Stop wasting time and my money.”

So the lawyers get millions but I wonder what us small fry folks get?

— Chris (@browncoat1of1) December 29, 2022

Global investment platform BnkToTheFuture founder Simon Dixon, who has been an active voice in the Celsius bankruptcy proceedings, noted in a Dec. 23 tweet that by the time users are able to get their funds back from Celsius, they should only expect around to receive around hal what they put in.

Prepare yourself for 50% in 6 months with #Celsius Chapter 11 to manage your expectations | Focus on your family over XMas & rebuilding in 2023. https://t.co/E0WeDuPem0

— Simon Dixon (@SimonDixonTwitt) December 23, 2022

At the behest of Celsius, the U.S. trustee, and the unsecured creditors’ committee, judge Martin Glenn appointed fellow judge Christopher Sontchi to be a “fee examiner” on Oct. 20. His job is to negotiate and approve the fees set by lawyers and other professionals in the case.

The fee examiner is also being paid out of Celsius’ estate, with the latest fee statement submitted on Dec. 21 requesting just under $20,000 for work done during November.

Bankruptcy judge orders $44M in crypto to be returned to Celsius customers

The funds are made up of crypto held within custody accounts on Celsius that had not been transferred to Earn accounts.

A federal judge has ordered crypto lender Celsius to return crypto worth around $44 million to its customers.

According to Bloomberg, the order was delivered by United States Bankruptcy Judge Martin Glenn verbally at a Dec. 7 hearing, with the judge noting:

“I want this case to move forward. I want creditors to recover as much as they possibly can as soon as they possibly can.”

The order only involves crypto held in custodial accounts, and the $44 million is a tiny fraction of the billions Celsius owes creditors. The order comes after an agreement was reached between Celsius advisers and stakeholders that crypto deposited in custody accounts belonged to its users and not the platform.

It is important to note that this order only applies to pure custody assets — those that have never touched Celsius’ Earn accounts and have only ever been held in the custody program.

Celsius held over $210 million in custody accounts as of Aug. 29, but only around $44 million of that fit within the latest order’s criteria.

On the other hand, Celsius’ Earn accounts, which enabled depositors to earn interest, are where the majority of the $4.7 billion user funds are currently locked up.

Celsius has argued that users who deposited funds within its Earn accounts gave up ownership when they agreed to the company’s terms of service. A Dec. 5 Bloomberg report suggests that Celsius is looking to sell $18 million of stablecoins held in these accounts to fund its reorganization, with Judge Glenn set to address the issue of fund ownership on Dec. 12.

Meanwhile, on Dec. 5, the lender received approval from the judge for a $2.8 million key employee retention program (KERP) that it filed on Oct. 11.

#CELSIUS HEARING LIVE: KERP is approved. Discussing Celsius Exclusivity now. K&E talking about the Feb 15 compromise. Expanding that the auctions and plan formation are all in coordination with the UCC and they are cognizant of the level of frustration in the community.

— Simon Dixon (Beware Impersonators) (@SimonDixonTwitt) December 5, 2022

The program involves bonuses to select employees, to ensure they remain with the firm so that it may continue its limited business operations.

Celsius employees have been quitting in droves, with only 170 remaining compared to the 370 it had when it first started the bankruptcy proceedings.

FTX downfall was a turning point for citizen journalism: Coinbase CEO

Brian Armstrong, the CEO of Coinbase has applauded the efforts of crypto analysts and citizen journalists amid the fall of FTX.

Coinbase CEO and co-founder Brian Armstrong have applauded the work of citizen journalists and blockchain analysts surrounding the unfolding FTX crisis and its former CEO Sam Bankman-Fried.

In a Nov. 16 tweet that has been retweeted over 9,000 times at the time of writing, Armstrong suggested that it has been regular citizens, rather than traditional media that has uncovered many of the developments associated with the liquidity crunch and subsequent bankruptcy filing of FTX.

Commenting on a recent New York Times “puff piece,” Armstrong said it: “Feels like a turning point for citizen journalism and loss of trust in MSM” — referring to mainstream media.

Twitter has broken just about every piece of this FTX story using blockchain analytics, while NYT is writing puff pieces on a criminal.

Feels like a turning point for citizen journalism and loss of trust in MSM.

— Brian Armstrong (@brian_armstrong) November 16, 2022

Crypto Twitter has also been highly critical of the article, with Polygon Studios CEO Ryan Wyatt tweeting at the author of the article that Bankman-Fried had “committed significant crimes” and it was “a disservice to all of those impacted.”

Elon Musk has tweeted about the rise of citizen journalism on Twitter multiple times since acquiring the social media network in October.

Mainstream media will still thrive, but increased competition from citizens will cause them to be more accurate, as their oligopoly on information is disrupted

— Elon Musk (@elonmusk) November 11, 2022

As an example of the rise of blockchain analysis and citizen journalism, on Nov. 5 blockchain tracker Whale Alert shared that just under 23 million FTX Token (FTT), representing approximately 17% of the circulating supply and valued at $584.8 million at the time, had been moved onto Binance.

This event turned out to be one of the first signs of FTX’s liquidity crises, a story that was not picked up by the NYT until Nov. 8.

Blockchain investigators were also the first to break the news of the FTX hack, with the movements of funds to different wallets being closely tracked by Twitter users who deduced it was a hack hours before FTX’s official announcement.

Twitter Spaces has also become home to The Roundtable Show, a gathering of crypto community members hosted by Mario Nawfal which has been providing live updates and commentary on the FTX saga as it develops, with figures such as Elon Musk, BankToTheFuture CEO Simon Dixon and internet entrepreneur Kim Dotcom, who have joined with 891,499 people tuning in.

While Twitter has often been instrumental in breaking news and analysis on the FTX saga, it also has harbored its fair share of conspiracy theories and outright false information.

Bankman-Fried’s recent cryptic Twitter thread caused wildfire rumors on the platform that he was using the newly posted tweets to delete older, possibly incriminating ones, a theory that was later debunked.

Twitter users also pointed to Bankman-Fried’s private jet leaving The Bahamas for Argentina on Nov. 12 and speculated he was fleeing there, which he denied, and a source later told Cointelegraph that Bankman-Fried was under supervision by Bahamian authorities.