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Celsius is aiming to merge two of its entities based in the United Kingdom and the United States. The insolvent cryptocurrency lender is facing allegations of inadequate record-keeping concerning its affiliated companies, which has rendered it nearly impossible to “fully reconstruct” intercompany claims.
The separation between Celsius’ UK and US operations was labeled a “sham” by the creditors.
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- In mid-2021, the company’s Celsius Network Limited division allegedly transitioned the customer-facing operations on the Celsius platform from CNL to a Limited Liability Company (LLC), a newly established shell entity incorporated in Delaware.
- CNL was accused of shifting billions of dollars in liabilities to the LLC, while the former retained almost all of the assets linked to those obligations.
- The assets were purportedly utilized for “money-making investments,” despite warnings from the UK regulatory body Financial Conduct Authority (FCA) to halt all retail activities in the country.
- The court document filed on May 1st indicated that the “migration resulted in intercompany chaos.” It also disclosed that no formal documentation of the CNL-LLC intercompany relationship was finalized for several months, and even when it was, the transactions the agreements facilitated remained unclear.
- It further contended that the two entities ought to be regarded as a single entity, as such a move is an “appropriate remedy.”
- The financial records provided minimal clarity, as Celsius consistently failed to document intercompany coin transfers. It is estimated that thousands of entries are absent from the records.
- The debtors have been working to reconcile these records for several months but have yet to reach a resolution. However, the document indicated that a complete accounting on a transaction-by-transaction basis may never be achievable.
- Earlier this year, Celsius announced the reopening of Distributable Assets in specific Custody Accounts, enabling eligible customers to withdraw funds for the first time since the lender suspended its services in June 2022.
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