Investors in the insolvent crypto bank Celsius will probably need staying power. According to experts, it is still completely unclear before it becomes clear when and if customers will get their money back. There are hardly any precedents when dealing with customers.
Hard times are ahead for the customers of the insolvent crypto bank Celsius. Experts say they will face years of uncertainty before knowing how, when and if they will ever see their money again. “There will be numerous processes,” predicts insolvency expert Daniel Gwen from the law firm Robes
Stephen Gannon, a partner at Davis Wright Tremaine, predicts that because of the complexity of the case, it will take at least six months just to draw up a bankruptcy return plan.
“It’s going to be a 3D chess game.” In recent years, large crypto companies such as the trading platform Mt.Gox have gone bankrupt several times in 2014. But there is little precedent for dealing with crypto bank clients, says James Van Horn, a partner at Barnes
According to the US creditor protection paragraph “Chapter 11”, the donors of secured loans receive their money first. In second place are creditors of unsecured loans and lastly shareholders. “Borrowers of unsecured loans are not entitled to any funds,” Van Horn points out. “They sometimes only get a very small amount.” Celsius has already warned its customers not to classify them as unsecured creditors, said US attorney Max Dilendorf, who specializes in cryptocurrencies.
Martin Jabou from Hamilton in Canada also belongs to this group. The 27-year-old has cryptocurrencies with a volume of $45,000 in his account with Celsius, the value of which has already more than halved. “We’ll probably be the last ones on the repayment list. I don’t know how to pay for the rent or the car.” Lawyer Dilendorf expects a wave of lawsuits from customers. It will be interesting to see how Celsius justifies its decision to classify them as unsecured creditors.
Crypto banks act like traditional money houses. However, they are hardly regulated and are not part of the deposit insurance funds that exist in many countries. These step in up to a certain amount if an institute goes bankrupt. As a result of the price turbulence in Bitcoin
Crypto banks experienced a boom during the pandemic. They lured investors with double-digit interest rates on cyber currency deposits. Hedge funds, in turn, borrowed crypto money from companies like Celsius at high interest rates in order to speculate with Internet currencies or to invest in financial service providers from the crypto sector. With Bitcoin falling
