Celsius faces backlash after unveiling dull recovery plan to exit bankruptcy

  • March 6, 2023

Amid the ongoing bankruptcy hearing, the now-collapsed crypto lender Celsius Network has unveiled a plan to exit the process by rebranding it into a publicly traded recovery corporation.

Celsius lawyers shared that if the plan is approved, creditors with locked assets above an unspecified threshold will receive a token called the Asset Share Token (AST). Notably, the AST to be received will reflect the value of their assets, and holders would be entitled to earn dividends or sell them on the open market.

However, the plan has received backlash from the crypto community, with commentators terming it a potential scam. In particular, a Twitter user and commentator by the pseudonym Crypto_Tolkien suggested that the reorganization is a scam while questioning the issuance of a new token instead of the users’ originally deposited cryptocurrencies. 

“The fake reorganization is a scam to steal more of your funds locked on their platform and issue you a worthless “NEWCO” token instead of your Bitcoin, Eth, or Link. They are trying to block any other plan from being considered besides their own,” he said in a tweet on January 29. 

Controversy around payout threshold 

It is worth noting that the threshold for releasing the token has not been set, with Celsius lawyers stating that there are ongoing discussions around the matter with the Unsecured Creditors Committee (UCC). Consequently, Crypto_Tolkien alleged that the two entities are planning to steal more money.

“Celsius and the UCC are planning right now to steal your money that you withdrew 90 days prior to Celsius declaring bankruptcy through clawbacks. They don’tdon’t care if you used that money to pay taxes or for hospital bills. They will put a lien on your house and garnish your wages,” he said

Failure to get the right bids

Indeed, according to Celsius, the

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Gemini to contribute $100 million to Genesis bankruptcy recovery plan

  • February 12, 2023

Cameron and Tyler Winklevoss.

Adam Jeffery | CNBC

Crypto exchange Gemini will contribute up to $100 million in cash, earmarked for its customers, as part of an agreement with bankrupt Genesis Global Capital and parent Digital Currency Group, Genesis’ lawyers said in a court hearing on Monday.

The restructuring deal and recovery plan were announced during a status conference for crypto lender Genesis, which filed for bankruptcy protection in New York on Jan. 19. Genesis owed its creditors, including Gemini and its users, billions of dollars.

Gemini, founded by Cameron and Tyler Winklevoss, had been engaged in a high-profile back-and-forth with Barry Silbert, who owns DCG. The Winklevoss twins have publicly blamed Silbert’s mismanagement of Genesis for issues with one of its own products called Earn, which promoted returns of up to 8% on customer deposits.

“This plan is a critical step forward towards a substantial recovery of assets for all Genesis creditors,” Gemini told its users in correspondence viewed by CNBC. It demonstrates “Gemini’s continued commitment to helping Earn users achieve a full recovery.”

The broader details of the restructuring plan were announced in Manhattan bankruptcy court. The deal, cut between Genesis, DCG, Gemini, and Genesis’ range of creditors, is largely predicated around a refinancing of Genesis’ loans to DCG. Genesis loaned over $500 million worth of cash and bitcoin to DCG, in part to fund founder Silbert’s venture investments.

DCG will also contribute to Genesis “all equity” in Genesis’ trading subsidiary, which remained operational during the bankruptcy. Additionally, DCG will provide a two-tranche debt facility, maturing in June 2024, with 11% interest on one tranche, and a 5% interest-paying bitcoin tranche, “roughly equal to around $500 million,” a Genesis lawyer said.

DCG will also issue convertible preferred stock to Genesis creditors.

DCG also extended a $1.1 billion

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