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Crypto News: Following in the footsteps of FTX, the defunct cryptocurrency lender Celsius is the latest to confront charges of poor book-keeping in its corporate framework, which has resulted in a legal battle that pits its clients against investors in its Series B offering. Celsius, which was once the crypto sector’s leading institution, is now attempting to merge its operations in the United Kingdom and the United States after court documents claimed that the disparity between the two was a “sham.”
Celsius To Conjoin US & UK Entities
A committee of Celsius’ creditors has made parallel filings in which they assert that the reorganization was a “sham” and that the exponential amount of capital that moved between the two entities was fraudulent in nature. With this, the committee believes that the New York court — which is looking to return funds to creditors — should entirely disregard these filings.
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The company established a Limited Liability Company in the state of Delaware in 2021 with the intention of transferring holdings through an array of financial dealings. In June of 2021, the Financial Conduct Authority of the United Kingdom had urged the Celsius Network to discontinue its operations and halt all activities in the nation.
Celsius’ Bankruptcy Woes
In a statement made on May 1, Celsius highlighted that the migration brought about widespread intercompany turmoil. The petition also pointed out that the internal records are severely lacking any clarity, thus making it difficult to comprehend and detangle the business dealings of each corporation.
In addition, the filing alleged that regular retail Celsius consumers were misled by the management and as a result did not grasp the ramifications of this transfer, however, more knowledgeable Series B investors were conscious of such faulty record-keeping. The filing repeatedly emphasized the fact that the two entities should be considered as one for bankruptcy proceeding purposes.
In the wake of this crypto news, the price of Celsius’ native token CEL, dropped by 2.5% and is currently exchanging hands at $0.27 during the course of writing.
Also Read: U.S. Investors Abandoning Crypto Exchanges, But Where Are They Going?
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