Another group of claimants against bankrupt crypto lender Celsius Network LLC is banding together to retain legal representation and seek to form an ad hoc group in bankruptcy hearings to get their money back.
See related article: Celsius says it owes its users US$4.72B amid a US$1.19B balance sheet deficit
- “A F,” an active member of the advocacy group, told Forkast that group members’ money was trapped in a “withhold account,” a type of account for users in U.S. states that could not use custody accounts for regulatory reasons to withdraw deposits. Withhold accounts were also frozen when Celsius halted all withdrawals.
- “A F” said in the withhold claimants’ Telegram channel that the withhold account was not disclosed at a recent Celsius hearing, although it falls under Section 11.
- The withholding accounts amounted to just US$14.5 million of the roughly US$12 billion in assets under management held by Celsius when it stopped withdrawals, according to CoinDesk.
- The claimants have retained the legal representation of Troutman Pepper partner Deborah Kovsky-Apap and seek to form an ad hoc group, an organization capable of protecting the interests of a group of creditors with a common interest in bankruptcy.
- The ad hoc group needs to pay for its legal representation as they launch fundraising to hire legal representation. Each participant will contribute US$1,500, or an amount they can afford.
- Celsius has a US$1.2 billion hole in its balance sheet, revealed in a legal document.
- The withhold account depositors are not the only ones forming an ad hoc group. Custody account holders have also formed such a group.
See related article: Celsius has US$2.8B in crypto liabilities: court filings