In a Reuters newswire analysis article, business restructuring associate Daniel Gwen discussed the impact of investors in the chapter 11 bankruptcy filing of cryptocurrency lender Celsius Network.
Daniel notes that it is likely the Celsius bankruptcy proceeding could last for years and involve lots of litigation.
Celsius has set the stage for conflict between its customers and its sophisticated institutional creditors – in particular, Celsius has pointed out in its pleadings that customers transferred ownership of crypto assets to Celsius, making those customers unsecured creditors. This detail may undercut customer expectations, who thought they were depositing their assets into a construct similar to a traditional bank. In general, chapter 11 bankruptcies prioritize repayments to secured creditors, then unsecured creditors, and then equity holders.
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