Collapsed Celsius Sets January 3 as Deadline for Filing Claims Following Court Ruling

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Collapsed Celsius Sets January 3 as Deadline for Filing Claims Following Court Ruling
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  • The bankrupt crypto lender filed for Chapter 11 bankruptcy protection in July.
  • Interim reports show insufficient accounting controls caused the liquidity crisis.

The US bankruptcy court of the Southern District of New York has approved a request by insolvent crypto lender Celsius to move the Proof of Claims submission deadline to January 3, 2023. The directive targets individuals with claims against Celsius Network LLC and its seven affiliates- listed as debtors in the ongoing Chapter 11 bankruptcy.

According to the ruling, customers in agreement with Celsius’ schedule of their claims need not submit the PoC.

In a Twitter thread dated November 20, the beleaguered lender noted, “this week, the bankruptcy court approved our motion to set the bar date, which is the deadline for all customers to file a claim. The bar date has been set for January 2023.”

The court ruling has ordered the debtors to send the PoC forms by email for the claims – appearing in the debtors’ schedule not marked as unliquidated, contingent, or disputed – with named addresses and email as appearing in the debtors’ books.

In this regard, Celsius noted that “customers should expect to receive a notice regarding the bar date and next steps in the proofs of the claim process from our claims agent, Stretto, via email, physical address, and through a notification in the Celsius app.”

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Uncertainty looms as the latest report shows insufficient controls in Celsius’ operations

Amid the court ruling, there is uncertainty in tracing wallets to the indebted customers, per interim findings reported on November 19. Examiner Shoba Pillay has disclosed material findings concerning the lender’s conduct before the collapse.

Pillay claims the lender was insolvent as of June 12 and that the custody program of Celsius LLC did not have “sufficient accounting and operational controls or technical infrastructure.”

There were “no efforts to segregate or separately identify any asset associated with the withhold accounts, which were commingled in the main wallet,” wrote Pillay. As a result, it may take longer to compensate for the losses. There is uncertainty with matching assets owed to the investors before the wind-up. The next hearing set for December 5 would reportedly shed light on custody and withhold accounts.

Celsius filed for chapter 11-bankruptcy protection on July 13, one month after blocking customer withdrawals, swaps, and transfers. The firm had 1.7 million clients and roughly $12 billion in customer deposits at the time of insolvency.