As per the complaint filed, the bankrupt platform is seeking relief along with the declaratory judgment revolving around the recovery of its money and property. The filing highlighted EquitiesFirst and its CEO as the defendants. Furthermore, Celsius filed a summon for the same day which requires the private lender to either provide a motion or answer within a span of 35 days.
EquitiesFirst is a private lending platform that owes Celsius more than $439 million of cash and Bitcoin. Celsius first took collateralized loans from the lender back in 2019 to support its operations. Unfortunately, the bankrupt platform failed to retrieve the collateral it had pledged to EquitiesFirst. Still, it was informed that the lender could not return the amount Celsius had provided in the first place.
EquitiesFirst owed Celsius a staggering amount of almost $509 million as of 2021. The rapid increase in the overall debt resulted from the loans being overcollateralized. However, since September 2021, the debt has been gradually repaid at the rate of $5 million per month. Based on the situation in July 2022, the lender owned Celsius for almost $439 million, with the debt comprising $361 million in cash along with almost 3,761 Bitcoin tokens.
The Situation Surrounding Celsius
Celsius was among the first crypto firms to implode last year when the market situation got increasingly bearish. The platform had no other option but to file for Chapter 11 bankruptcy protection in July last year. Furthermore, the co-founder and the former CEO of the network, Alex Mashinsky, was arrested just earlier this year and now faces a series of charges which include securities fraud and manipulation of the company’s CEL token.
Similarly, the Federal Trade Commission also slapped the bankrupt network with a fine of almost $4.7 million for allegedly misleading the users. However, the judgment was, later on, suspended to utilize the assets as part of its bankruptcy proceedings.
As of now, creditors are actively involved in voting on a settlement plan. As soon as it was approved, it would see a consortium, dubbed Fahrenheit, buy all of the network’s assets and return the creditors’ funds by launching an entirely new company.