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Bankrupt cryptocurrency lender Celsius Network filed an “adversary complaint” against EquitiesFirst Holdings on Wednesday, according to the confidential adversary complaint.
This action comes as Celsius seeks to recover assets from the private lender, which allegedly owes $439 million. This debt consists of $361 million in cash and 3,765 BTC as of July 2022.
EquitiesFirst: The ‘Mysterious’ Debtor to Celsius
The filing indicated that Celsius is pursuing injunctive relief and a declaratory judgment concerning the “recovery of money/property,” as noted in the docket’s title. The complaint names EquitiesFirst and its CEO, Alexander Christy, as defendants.
Established in 2002, EquitiesFirst “specializes in long-term asset-backed financing” and manages stock but began offering crypto-collateralized loan services in 2016. Three years later, Celsius sought financial support from EquitiesFirst to “support its operations,” but their overcollateralized crypto loan faced challenges by 2021.
Earlier this July, reports emerged revealing that the Indianapolis-based private lending platform was the unidentified debtor to Celsius, owing a total of $439 million to the distressed firm.
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Alongside the adversary complaint, Celsius also filed a summons on the same day, requiring EquitiesFirst to submit a motion or response within a 35-day period.
A Year After Bankruptcy
In the wake of the cryptocurrency market’s significant downturn last year, Celsius became one of the initial victims, seeking Chapter 11 bankruptcy protection in July 2022. A year later, co-founder and former CEO, Alex Mashinsky, was arrested and is currently facing multiple charges, including securities fraud and manipulation of the company’s native CEL token.
Shortly after, the Federal Trade Commission imposed a substantial $4.7 billion penalty on Celsius for allegedly misleading users, but the ruling was temporarily suspended to allow the platform to integrate these funds into its bankruptcy proceedings.
In mid-August, Judge Martin Glenn of the Southern District of New York Bankruptcy Court approved a motion permitting Celsius creditors to vote on a proposed settlement plan that, if approved, would involve a consortium known as Fahrenheit acquiring the troubled lender’s assets and compensating creditors through the creation of a new company.
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