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Will Ripple Emerge As A Saviour For Insolvent Celsius?

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Prominent blockchain payments firm Ripple Labs Inc, has turned heads after it expressed interest in buying assets of debt-ridden crypto lender Celsius. In an interview with Reuters, a Ripple representative stated,

“We are interested in learning about Celsius and its assets, and whether any could be relevant to our business,” while declining to comment regarding a possible acquisition.

In June this year, Celsius paused withdrawals citing “extreme” market conditions and filed for bankruptcy in New York last month, with a $1.19 billion deficit on its balance sheet.

Ripple on the other hand, has continued to sail through the crypto market turmoil and “is actively looking for M&A opportunities to strategically scale the company,” the spokesperson said.

For the record, the blockchain firm is not among Celsius’ major creditors, the latter’s bankruptcy filings showed. As for the latest development, both Ripple and Celsius did not provide any comment at the time of writing this article.

The San Francisco firm is currently in the limelight for its high-profile lawsuit with the US regulatory giant SEC.

Ripple’s Crucial Victory Against The Sec

The firm was sued by the Securities and Exchange Commission in 2020 over the token XRP. The agency accused Ripple and its current and former chief executives Brad Garlinghouse and Chris Larsen of illegally selling $1.3 billion XRPs in unregistered securities offerings, which Ripple’s founders created in 2012.

Ripple and the executives have denied the allegations and argued that XRP should be treated as a digital currency rather than an investment contract like a stock. The case has since then dragged on.

As of now, the blockchain firm and individual defendants, have submitted their response against the SEC’s objections to the court’s recent rulings regarding the disclosure of emails related to the Ethereum speech of former top exec William Hinman.  

The defendants have requested the judge to deny the SEC’s objections. So far, Magistrate Judge Sarah Netburn has issued three orders that required the agency to produce the documents in question.

The court also squashed the SEC’s claims of attorney-client privilege [ACP] in July saying that providing legal advice wasn’t the predominant purpose of the communications.


Ex-CFO of Celsius To Be Hired Back for $92,000 per Month

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Celsius has been one of the most affected platforms during the crypto bear market. Ex-CFO Rod Bolger is being sought after by troubled loan platform Celsius in exchange for $92,000 per month, stretched over a minimum of six weeks.

According to a motion submitted to the Southern District of New York, the troubled lender claims that Bolger is necessary to assist it in navigating the bankruptcy procedures as an advisor.

“Because of Mr. Bolger’s familiarity with the Debtors’ business, the Debtors have requested, and Mr. Bolger has agreed pending the Court’s approval, to continue providing advisory and consulting services to the Debtors pursuant to an Advisory Agreement.”“In consideration for the advisory services rendered by Mr. Bolger, the Debtors agree to pay Mr. Bolger the sum of CAD $120,000 per month, prorated for partial months.”

the filing reads

Celsius stated that Bolger helped to keep it stay robust

The motion continues by stating that Bolger led initiatives to keep the company afloat during this year’s turbulent market volatility, managed the business’ finances, and served as the company’s leader.

Ultimately, the Southern District of New York will determine whether to permit Bolger to join Celsius. On Monday, August 8, a Zoom hearing will take place to discuss the motion.

Before leaving on June 30, approximately three weeks after the platform halted all withdrawals, Bolger, a former CFO for the Royal Bank of Canada and subsidiaries of Bank of America, had worked for the firm for five months. He offered his resignation as a result of “severe market conditions.”

This motion demonstrates that during his full-time employment with the Company as CFO, he received a base salary of $750,000, a performance-based cash incentive of up to 75% of his base, together with stock and token options, bringing the maximum of his total income range to around $1.3 million.

Celsius has over 100,000 creditors, some of whom gave the business money with no collateral to back it up. Among its top 50 unsecured creditors are Sam Bankman-trading Fried’s business Alameda Research and a Cayman Islands-based investment firm.

Celsius’s legal team sells its investors down the river

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Another depressing day has come to the crypto world. The legal team for the defunct cryptocurrency lender Celsius asserted that customer money belonged to the company, not the client. The burden of Celsius’ downfall will fall on retail customers, according to the bankruptcy filings. Lawyers for the organization claim that registered customers from more than 100 different nations relinquished ownership of their bitcoin deposits in Earn and Borrow accounts.

The lending network submitted a Chapter 11 bankruptcy petition to the Southern District of New York on Thursday. This is more than a month after it stopped accepting client withdrawals due to unusually challenging market conditions. The bitcoin company did a great job of unfairly treating its clients.

At the first bankruptcy hearing for the firm on 18 July 2022, everything went wrong for the investors. Lawyer Pat Nash of Kirkland outlined how, in accordance with Earn and Borrow’s terms of service (ToS), retail consumers having accounts gave the company the title to their cryptocurrencies. The entity may use, sell, pledge, and rehypothecate those coins as it sees fit as a result.

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Terms of Service (ToS) for Celsius accounts

The legality of whether Custody account holders retain ownership of their assets, though, has come into dispute. According to the Celsius ToS, the company is not permitted to use currencies in Custody accounts without user consent. However, lawyers questioned whether this was applicable to the cryptocurrency that the company currently possessed. They posed the following questions after providing an outline of the case:

“Are the crypto assets in Celsius’ possession property of the estate? Is the answer to this question different for crypto assets held under the Custody vs. the Earn program?”

Yet another dig at Celsius situation

“Not your crypto, not your keys.”  Since MtGox’s demise years ago, this tagline has been repeated many times. But it seems like the warning came at the right time once more. After legal action a few days ago, economists warned that the platform’s investors might be let down. Experts claim that Celsius is more of an unregulated bank than a lender of crypt- assets.

Jameson Lopp, the Bitcoin advocate, has also expressed his disappointment on his Twitter profile.

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Furthermore, for non-accredited American investors, the Custody programme was introduced in April after some states issued cease and desist orders over Celsius’ Earn programme.

On 13 June 2022, Celsius stopped all users’ incentives and withdrawals, and they subsequently stopped margin calls, liquidations, and the issuance of new loans.

In a tweet on 19 July 2022, attorney David Silver summarised Celsius’s claim to consumers’ money. Users should “stop thinking of it as your crypto,” he advised because everything officially belongs to the company.

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However, in an effort to mend fences with customers who have sent hate mail and threats to business employees, Celsius is leveraging the mining operation. As a result of the initiative, it is also taking asset sales and other third-party investment opportunities into consideration.

Celsius Has a $1.2 Billion Deficit in its Balance Sheet, Bankruptcy Filing Reveals

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The bankruptcy case of Celsius has disclosed some unwelcome news regarding the condition of the crypto lending platform, including a $1.2 billion shortfall caused mostly by customer deposits.

Celsius CEO Alex Mashinsky signed a chapter 11 bankruptcy petition on July 14 that stated the business had around $4.3 billion in assets vs $5.5 billion in liabilities, creating a $1.2 billion shortfall.

However, the value of the CEL tokens has piqued the interest of some in the crypto world, since the total market cap for CEL tokens is just $321 million, according to CoinGecko statistics.

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Celsius Has a $1.2 Billion Deficit in its Balance Sheet, Bankruptcy Filing Reveals 5

Celsius owes users over $4.7 billion

Assets, including $600 million in CEL tokens, $720 million in mining equipment, and $1.75 billion in cryptocurrencies, offset the majority of the company’s liabilities, or $4.72 billion in customer deposits.

410,421 Lido Staked ETH (stETH) tokens worth $479 million and yielding 5% APY is included in the crypto assets, but the tokens themselves cannot be exchanged for Ether (ETH) until the Ethereum network switches to Proof-of-Stake consensus in the Merge.

According to a letter signed by Celsius CEO Alex Mashinsky, the firm may also sell Bitcoin (BTC) produced by its Celsius Mining Bitcoin mining operation in order to “create sufficient assets” to pay off at least one of its debts and generate future revenue for the business. By 2023, the business anticipates producing around 15,000 BTC.

Cory Klippstein, the founder of Swan Bitcoin, has criticized Celsius and Voyager for choosing Chapter 11 protection over the Securities Investor Protection Act recently (SIPA).

The cryptocurrency lender closed its latest loan on Tuesday by repaying Maker for $223 million, Aave for $235 million, and Compound for $258 million.

Due to this, the company was able to regain tokens worth about $1.4 billion, the majority of which were held in the form of wrapped bitcoin (wBTC) and a certain sort of staked ether derivative (stETH).

Bitcoin Will First Trade $10K Before $30K: Survey

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Bitcoin will tap $10k first before reaching $30k, according to a poll conducted by Bloomberg. In the MLIV Pulse survey, participants were asked “Which level will bitcoin reach first – $30,000 or $10,000?”.

60% of the 950 investors responded that the token will be reduced to its current half and then bounce back to $30000.

The rest 40% saw it going the other way. At press time, BTC slid by 3.4% to trade at $20,560.

The prediction reflects the inherent fear among crypto investors in an industry that has been rocked by troubled lenders, collapsing currencies, and the loss of $2 trillion from the market cap.

Bitcoin has already shed more than two-thirds of its value since hitting nearly $69,000 in November and hasn’t traded as low as $10,000 since September 2020.

“It’s very easy to be fearful right now, not only in crypto but generally in the world,” said Jared Madfes, partner at Tribe Capital, a venture capital firm.

With respect to Ethereum, a majority of respondents still feel that one of those two will remain a driving force in five years.

But Ed Moya, senior market analyst at Oanda Corp., a foreign-exchange broker vouched for the king coin saying, “Bitcoin still is powering large parts of the crypto-verse, while Ethereum is losing its lead.”

On the other side, investors are anticipating a major BTC dumping that could further dent the already fragile market.

Bitcoin Bracing For A Mega Sell-off?

On July 6, attorney Nobuaki Kobayashi, appointed trustee in the Mt. Gox rehabilitation process, confirmed that he was “preparing to make repayments” to those account holders who lost their funds in the infamous hack.

Many crypto experts claim that the release of nearly 3 billion bitcoin by Mt. Gox in the current market situation might cause BTC to bottom in August.

In addition to that, a large wallet known to have links to the Celsius Network reportedly paid off $41.2 million in debt to Maker, one of the world’s largest decentralized finance [DeFi] platforms.

Experts fear that these two events might spur a flood of Bitcoins into the market, triggering a massive sell-off, and further pushing the price downward.

FTX and Celsius-The saga

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Due to a $2 billion hole in Celsius Network’s balance sheet, cryptocurrency exchange FTX has decided not to proceed with the acquisition. Initial plans for Sam Bankman-Fried’s exchange included assuming control of the Network.

The Block received the information from two people who confirmed to them that FTX was pulling out of the agreement. The struggling Network was in contact with FTX about financial support or a takeover, the Block reported on Thursday. But after carefully examining Celsius’s financial situation, FTX made the choice not to proceed.

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According to one of the individuals, FTX found it difficult to cope with the Network and also discovered a $2 billion shortfall in its balance sheet. On June 13, Celsius made an announcement just as people were starting to gently recover from Terra’s fall. The crypto lending site stopped trading, transferring funds, and withdrawing funds due to challenging market conditions.

Numerous consumers still can’t access their cash after more than 17 days, and user funds are still frozen. As it was stated on June 19 that the process would be gradual as they continue to improve their operations and liquidity, the platform has been very slow to release any updates.

Although withdrawals are no longer permitted, the network’s crypto lending business still rewards investors every week. It has been referred to as “insulting” by many.

What this signifies is unclear to investors. They are accruing rewards, but there is no mechanism for them to cash them in. Many users used Twitter to express their anger with the business. CEO of Celsius Network Alex Mashinsky stated that the assets were secure in the meantime.

Celsius finally clears the air

Breaking its silence, Celsius publishes a new blog to inform its audience of what is happening. The blog, however, doesn’t appear to give consumers even the tiniest bit of faith that their withdrawals and trading will resume.

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Source: Celsius blog

According to the blog, the Celsius team is moving fast to stabilize platform operations and liquidity. According to the staff, rapid actions are done to give the community more information.

The team’s various activities are described in detail on the blog. A timetable for when they will resume full platform activity is not specified, though.

Additionally, the Celsius team stated that they are taking the required actions to safeguard the assets. The group emphasizes several procedures, such as liability restructuring, among others. These activities will take time and are complex, according to Celsius.

The Allegation That Alex Mashinsky Tried To Flee the US Is False, Says Celsius

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According to the firm, Celsius CEO Alex Mashinsky has remained to work on restoring liquidity and operations rather than seeking to flee the country last week.

The struggling platform is doing everything it can to restore operations with CEO Alex Mashinsky, who is now based in the United States.

A representative for the platform has refuted claims that the Celsius Network’s persistent liquidity issue caused the company’s CEO to attempt to leave the country last week.

https://twitter.com/mikealfred/status/1541233082514124800?s=20&t=J_Yo8N-6UAJ9Tf6yevdHBQ

Celsius and Alex Mashinsky is doing everything to stabilize liquidity

“All our employees including our CEO are focused and hard at work in an effort to stabilize liquidity and operations. To that end, any reports that the CEO has attempted to leave the U.S. are false.”

After Mike Alfred, co-founder of the cryptocurrency analytics company Digital Assets Data claimed on Twitter on Sunday that Mashinsky attempted to leave the nation last week via Morristown Airport in New Jersey. Celsius made its statement shortly after.

According to Alfred, the CEO was attempting to travel to Israel, citing an unnamed source. He said, “Unclear at this time if he was arrested or just prevented from leaving.”

Alfred’s comments came after Celsius saw a significant “short squeeze” akin to that of GameStop, with the native token Celsius (CEL) rising by 300 percent in only one week by June 21.

On June 14, the price of CEL also rapidly rose by more than 600%, with observers attributing the occurrence to an exchange error or the liquidation of short speculators.

According to CoinMarketCap, CEL is now trading at $0.7299, down about 9% over the previous 24 hours. Over the last 14 days, the native token of Celsius has increased by more than 160 percent.

Celsius’ Recovery Process Would Take Time- Update

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Crypto lender Celsius Network today returned to provide an update after its week-old announcement of halting withdrawals and transfers sent shockwaves across the market. The platform released a blog asking users for more time in order to get things back on track.

“We want our community to know that our objective continues to be stabilizing our liquidity and operations. This process will take time,” the firm said in a blog post.

“As has been a priority since our company’s inception, we maintain an open dialogue with regulators and officials. We plan to continue working with regulators and officials regarding this pause and our company’s determination to find a resolution.”

The recent carnage saw the world’s dominant coin bitcoin dropping below the $20,000 mark and the crypto market cap losing over 2 trillion in value over the weekend.

On top of that Terra’s crash had further aggravated the already fragile situation spurring mega sell-offs. Despite assurances and promotional activities, Celsius failed to quell panic investors and found itself on the edge of potential liquidations.

Seeing no other viable options, the lending and borrowing platform decided to pause its operation citing “extreme market conditions.”

Celsius’ lead Investor Offers A Helping Hand

Online investment platform BnkToTheFuture co-founder Simon Dixon has proposed a recovery plan similar to the one offered to Bitfinex after its Bitcoin hack in August 2016 which he claims was resolved within nine months.

Without detailing any specifics, Dixon stated that as a Celsius shareholder and lender, and due to the “short-term systemic impact on those that own Bitcoin,” he was “keen to support Celsius with a recovery plan.” 

“It’s my position to offer solutions as we have the experience, licenses, and technology to do so,” he added.

Following the infamous breach, Bitfinex announced a recovery plan, which involved “promises to repay” in the form of BFX tokens to customers, representing the lost funds in the incident.

These tokens allowed users to trade on the open market or held later for future repayment, thus enabling customers to speculate on the firm’s recovery.

Later, BnkToTheFuture worked with Bitfinex to help users by converting the BFX tokens into equity in the company.

Celsius CEO Alex Mashinsky Finally Breaks Silence Amidst the Chaos

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Alex Mashinsky, the embattled company Celsius’s CEO, has finally spoken out on the topic three days after the crypto lender abruptly declared that all customer withdrawals, swaps, and transfers would be halted.

Those expecting answers as to when users will be able to withdraw monies again will be disappointed by Mashinsky’s response.

Mashinsky took to Twitter, addressing publicly for the first time since his company’s withdrawals were halted on Sunday night, to reassure the Celsius community that the company’s team is working “round the clock” to resolve the issue and to ask for users’ patience.

Celsius CEO says that the team is working non-stop

Notably, Mashinsky offered no indication of when he hopes or expects Celsius to be operational again. Soon after, Twitter users pleaded with Mashinsky for assurances about the security of clients’ deposits, but he did not react.

Celsius halted withdrawals on Sunday to “stabilize liquidity” and “preserve and protect assets” after Lido’s Staked Ether (stETH), a cryptocurrency provided on the platform, began to exhibit abnormalities.

The Ethereum 2.0 beacon chain (which will eventually combine with the Ethereum mainnet) symbolizes stETH, which is designed to be pegged to the value of ETH. As a result, stETH is frequently used as collateral on platforms such as Celsius to borrow ETH.

If stETH remains depegged from ETH, it’s unclear how the team will address the problem (at the time of writing, stETH is currently trading at .93 ETH). If no alternative finance sources can be identified, the corporation has reportedly contacted solicitors to investigate restructuring the company.

The announcement of the withdrawal freeze knocked Celsius’ native coin down 70% in an hour on Sunday. Mashinsky had been speaking much more freely just a day before, chastising a Twitter user for promoting “fear, uncertainty, and doubt” by citing allegations that retail investors were being locked out of their accounts.

Celsius Is Working On Restructuring by Hiring a Counsel

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Celsius is said to have recruited attorneys to assist with the platform’s restructuring in the hopes of reviving it. It is one of the most well-known cryptocurrency lending platforms.

The platform has been having some difficulties due to the current market conditions, which has resulted in the company freezing user accounts. Withdrawals, swaps, and transfers between accounts have been put on hold. The platform cited harsh market conditions as the rationale for the move in a blog post.

The situation has deteriorated to the point where the board appears to have lost faith in Alex Mashinsky, prompting them to make the decision. Celsius recruited restructuring counsel from the law firm Akin Gump Strauss Hauer & Feld LLP, according to a Wall Street Journal article.

It was most likely done to address the current financial challenges, which appear to be growing.

Celsius is seeking new funding options

Celsius is first looking for new funding possibilities from investors, according to one of the people familiar with the matter. Other strategic options, such as financial restructuring, are also considered.

To make money, the platform mostly depends on lending out user deposits. Celsius had amassed and managed over $11.8 billion in assets as of May 17. It has over 1.7 million members who can earn up to 18.63 percent on cryptocurrency deposits.

The decision by Celsius to suspend its platform aroused criticism and raised the potential that it would follow LUNA’s lead. The team may be making hasty decisions in order to avert a calamitous collapse. CEL, which had dropped precipitously, has recovered and is now trading at $0.4839, up by almost 50 percent in the last 24 hours.