Bankrupt cryptocurrency lender Celsius Network has taken legal action against EquitiesFirst Holdings by submitting an “adversary complaint.” This move comes as Celsius attempts to recoup assets from the private lender, which reportedly owes a total of $439 million. The debt includes $361 million in cash and 3,765 BTC as of July 2022. Celsius is seeking injunctive relief and a declaratory judgment related to the recovery of money and property.
EquitiesFirst Holdings, founded in 2002, specializes in long-term asset-backed financing and manages stock portfolios. However, in 2016, the company expanded its services to include crypto-collateralized loan offerings. In 2019, Celsius sought financial assistance from EquitiesFirst to support its operations. Unfortunately, their overcollateralized crypto loan encountered difficulties by 2021.
Earlier this July, reports emerged revealing that EquitiesFirst Holdings was the mysterious debtor to Celsius, owing the troubled firm a staggering $439 million. In response, Celsius has filed the adversary complaint against EquitiesFirst and its CEO, Alexander Christy.
In addition to filing the adversary complaint, Celsius Network also submitted a summons on the same day, mandating that EquitiesFirst present a motion or response within 35 days. Celsius is determined to explore all legal avenues to recover the owed funds and assets from EquitiesFirst.
Celsius Network faced significant challenges during the cryptocurrency market’s sharp decline last year. In July 2022, the company filed for Chapter 11 bankruptcy protection. A year later, the co-founder and former CEO, Alex Mashinsky, was arrested and is now facing several charges, including securities fraud and manipulation of the company’s native CEL token.
Shortly after Mashinsky’s arrest, the Federal Trade Commission imposed a massive $4.7 billion fine on Celsius Network for allegedly deceiving users. However, the judgment was temporarily halted to allow the platform to incorporate these funds into its bankruptcy proceedings.
In mid-August, Judge Martin Glenn of the Southern District of New York Bankruptcy Court approved a motion that enables Celsius Network’s creditors to vote on a proposed settlement plan. If approved, the plan would involve a consortium called Fahrenheit acquiring the beleaguered lender’s assets and reimbursing creditors through the establishment of a new company.
Celsius Network’s adversary complaint against EquitiesFirst Holdings marks a significant development in their efforts to recover owed assets. With a tumultuous year behind them, including bankruptcy protection filings and legal troubles, Celsius is committed to pursuing every avenue available to retrieve the funds and property they are rightfully owed.