by Amy Castor And the David Gerrard
“Crooks do not play on moral weaknesses, greed or fear. They play on weaknesses in the system of checks and balances, and audits intended to complement the overall trust environment.” – Dan Davis, Lying for Money
Chrissy and Alex Mashinsky
How are the cryptocurrency markets?
Crypto is a cool marketplace. The desperation is still there — but the cash from other retailers to fuel the desperation is gone.
(No, we have no idea why bitcoin stopped at around $19,000. Our guess is margin call levels so price manipulation is higher than getting hit…but that’s just a guess.)
The ongoing monetary squeeze of the real world economy will lead to more crypto Ponzi schemes being exposed. Crypto executives are already jumping in as fast as possible.
With more Ponzi schemes exposed, expect more crypto operators to disappear. We’re a little surprised that Celsius’ Alex Mashinsky isn’t really gone.
The future of cryptocurrency reporting will be in bankruptcies, indictments, criminal prosecutions, and regulations. We’ll just be here and go “Yeah! Ha-ha-ha-Yeah!”
Celsius Network: Excuse me, convince me bro
The degree must be filtered, and the faster, the better. There is no viable business here, money has been lost, and the remaining company insiders and bankruptcy experts dodge do nothing to find more money for creditors.
The newly appointed examiner, Shoba Pillai, must pull the veil. We would expect any serious third-party report of a Celsius degree to be shocking.
A hearing was held on 7 October concerning the accounts of the guardianship of Celsius. (We explained the four types of percentage customers in a file Previous update.) The court will hold a two-part trial on the guardianship accounts on December 7th and 8th.
Judge Martin Glenn Pillay ordered the preparation of an interim report on the financial management of Celsius Corporation and the handling of clients’ accounts. This should be out next month. [CoinDesk]
The report will influence court decisions on custodial accounts and preference claims. A preference action, otherwise known as “refund,” is brought by a bankruptcy trustee against creditors who have been paid within a certain period before filing for bankruptcy. The period is 90 days for creditors and one year for insiders.
If you receive money as a Celsius client in the 90 days prior to filing for Chapter 11, that means you – the bankruptcy law says the court and the public need to know who you are. We talked about this in our latest update.
So Celsius published its asset, liability, and financial statements (SOFA) tables for each of its eight companies. The tables contain the names and transactions of each user in percentage terms on the platform, dating back 90 days. One document is 14,000 pages long. [List of schedules]
The crypto world was furious! Celsius has been doing “doxxing” for its clients, and many on Twitter have described it as a “leak” of information. Namcios in Bitcoin Magazine suggested that “laws should prevent a court from ordering this in the first place.” [Twitter, archive; Twitter, archive; Twitter, archive]
A Crypto company wants the benefits of the laws, but not the responsibilities.
Celsius and the UCC wanted to publish this data anonymously, but Judge Glenn made it clear that he would not rewrite the bankruptcy law for cryptocurrencies. He agreed to revise clients’ home addresses and email addresses – but the names needed to remain a matter of public registration. [Claims process FAQ]
Public data is already combing through, for things like crypto influencers telling Celsius users just to trust and keep the company, while withdrawing their private funds. [Twitter]
Celsius’ asset and liability schedule reveals that the company’s executives removed at least $17 million worth of cryptocurrency from the platform before filing for bankruptcy in July.
Mashinsky withdrew about $10 million in cryptocurrency in May. Celsius co-founder Daniel Leon withdrew approximately $7 million (and an additional $4 million from CEL referred to as “collateral”) between May 17 and 31. [Coindesk; FT]
The last time we noticed that Mashinsky was stepping down as CEO. Lyon also resigned. [Coindesk]
Celsius also reported that it paid former CFO Yaron Shalem more than $200,000 from December 2021 to March 2022. Shalem was abandoned from Celsius in November 2021, when he was one of 10 individuals detained by Israeli authorities in connection with alleged fraud at other crypto companies . [Twitter]
Kovizela shows how Mashinsky’s wife, Chrissy, withdrew $2.7 million in cryptocurrency from the exchange in May. [Twitter]
Mashinsky: Believe me
Celsius UCC held a meeting on Twitter spaces immediately after the October 7 hearing, in which White & Case attorney Greg Pesche answered questions from creditors. [YouTube]
Mashinsky joined a Twitter Spaces casual meeting on October 5 to explain how easy it is to get Celsius out of Chapter 11. Mashinsky’s stock-in-trade has always been implausible new money-making schemes. “Returning coins as well as mining is a lot to make profit and return all assets to all users, and for this, you will not need any licenses. Nothing.” [YouTube]
Why would creditors give this man their time? Only because they really want to believe they’ll get their money back.
The next “341” degree creditors meeting will be held on October 13 at 10:00 a.m. ET.
Three equity shares
Teneo, the business advisory firm that manages the liquidation of Three Arrow Capital (3AC), now has its hand in the vast NFT group owned by Starry Night Capital, a fund set up by 3AC and alias Vincent Van Doe. [Twitter] Teneo somehow got Van Dough to fully cooperate with them. [Teneo letter, PDF; Decrypt]
Most collection – 464 NFTs so far! – Already moved to a new wallet on OpenSea. There are a lot of gems to see here, including a large selection of Rare Pepes. Although we are a bit disappointed that our friend CryptoDickButt #1462 was not discovered there. [OpenSea wallet]
Starry Night has spent at least $35 million in crypto on NFTs, because NFTs are clearly a great investment for a leading crypto hedge fund! Teneo plans to sell the assets to get the money back to 3AC’s creditors. It’s too bad that the NFT market has completely collapsed and died, like Amy recently observed in Artnet. [Dune Analytics]
Teneo has created a website with updates on filtering. There is no news yet on where 3AC founders Su Zhu and Kyle Davies have arrived. [3acliquidation.com]
South Korea cuts the wings of Do Kwon. His passport has been revoked, limiting his ability to travel, even as he insists he is not a fugitive. This is with South Korea already issuing an Interpol Red Notice regarding Kwon. [Notice, Korean; Techcrunch]
Kwon claims that South Korea did not freeze for him encryption. [Twitter]
Prosecutors also requested an arrest warrant for Yu Mo, the head of public affairs for Terraform Labs, who allegedly used botnets to launder trade and manipulate cryptocurrency prices, in violation of capital market law. The warrant was dismissed, but the prosecutor’s office is considering resubmitting the application. [JTBC, in Korean; Yonhap News, in Korean; The Block]
Wave Financial is one of the companies that bid on Voyager’s assets but lost to FTX US, which we tied to winning the auction all along. We’re not even sure of the significance of the two-week blind auction. customer lists?
Voyager Digital was upset by Wave Financial’s interview with CoinTelegraph. In the Sept. 28 article, Wave said there were better bids on the table, but that “they were overrun for purely monetary bids.” [CoinTelegraph]
Voyager provided a lengthy response to the court, saying that Wave had never made a qualifying bid: [Filing, PDF]
If better bids had been available, Voyager would have accepted them. Wave’s false statements appear to be a publicity stunt in an attempt to restore lost credibility in the market as a result of its poor auction performance.
We think Voyager is protesting a lot.
Voyager’s next mass meeting takes place on October 19.
#Celsius #Reveals #List #Creditors #3AC #NFTs #TerraLuna #Voyager #Attack #Foot #Blockchain