Celsius Network, a crypto lender, has filed for bankruptcy in July of 2022 and is now facing allegations of poor record-keeping in its corporate structure from both customers and Series B investors. Customers claim that by setting up a Limited Liability Company in Delaware and transferring assets between entities with little or no records, management misled customers about the implications of this transfer. Furthermore, a committee of Celsius' creditors has dubbed this transfer as a 'sham' and 'façade'.

To make matters worse, court filings have stated that internal records are “sorely lacking” and that the intercompany organization has resulted in “chaos”, making it extremely difficult to discern assets between each entity.

In March of 2021, Judge Martin Glenn concluded that only customers had claims against the Delaware LLC. This increases the chances that the Series B investors could be reimbursed as bankruptcy laws normally downgrade their investments.

Further proceedings on July 24th will consider Celsius' argument to consolidate both entities and combine assets and customer claims. To complicate matters and add to the tension in the courtroom, NovaWulf, the favored bidder of Celsius' assets, is now competing with both Fahrenheit LLC and the Blockchain Recovery Investment Committee.

The allegations against Celsius are serious and ultimately could lead to large financial losses for many of its customers, as well as cause potential legal issues for the company and its investors. Poorly documented transactions not only implicate a lack of responsibility on the part of Celsius, but should also be a warning to crypto investors that they should always be wary of a company's record-keeping and organizational structure.



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