Crypto lending platform Celsius filed for Chapter 11 bankruptcy on July 13, 2022. Although the Celsius case involves digital assets, it remains subjec
Crypto lending platform Celsius filed for Chapter 11 bankruptcy on July 13, 2022. Although the Celsius case involves digital assets, it remains subject to United States Bankruptcy Code under the Bankruptcy Court for the Southern District of New York.
While this may be, a series of unusual events have ensued since Celsius filed for bankruptcy. For instance, Chief United States Bankruptcy Judge Martin Glenn — the judge overseeing the Celsius case — stated on Oct. 17 that the court will look abroad for guidance.
Glenn specifically mentioned that “Legal principles that are applicable in the United Kingdom are not binding on courts in the United States,” yet he noted that these “may be persuasive in addressing legal issues that may arise in this case.” While the treatment of the Celsius case will abide by U.S. bankruptcy laws, Glenn still aims to determine how the Celsius case should be handled.
Additionally, publicly available court documents related to Celsius’ bankruptcy proceedings have revealed personal data from thousands of the platform’s customers. A large financial disclosure form filed on Oct. 5 contains customer names, account balances, timing of transactions and more.
While this may have come as a shock to Celsius users, releasing this information is subject to U.S. Bankruptcy Code. Adam Garetson, general counsel and chief legal officer at WonderFi Technologies, a regulated cryptocurrency exchange based in Canada, told Cointelegraph that bankruptcy proceedings should be open, public and transparent:
“It is a strong way of avoiding any suggestion of impropriety by the courts and the persons and entities involved in the proceeding. As such, courts can make requests and impose orders on the bankrupt entity, including with respect to release of information which is available publicly.”
Yet, it is unusual that committee investigations have revealed such a large amount of customer information. This point was highlighted in an article from The National Law Review published on Oct. 18, which states, “Debtor filings and Committee investigations have revealed a great deal more to the public about the Debtors’ financial affairs, insider activity, and the path and direction of the bankruptcy case.” The article also states that even though so much personal information has been disclosed, “there is still little indication of how claims will be treated and repaid in this case.”
Celsius users face unintended consequences
While Celsius customers continue to wait for decisions to be made by the U.S. Bankruptcy Court, the release of personal information has resulted in additional stress. To add insult to injury, customer data was recently made public on a website called Celsiusnetworth.com.
The website allows anyone to search Celsius users by their name to reveal their losses, along with the cryptocurrencies they had invested on the platform. If this wasn’t bad enough, the website includes a leaderboard that lists customers in terms of rankings for the greatest losses. Customer information can then be tweeted from the website, as a tweet button appears once user information is shown.
The creators of Celsiusnetworth.com — who go by the name “Avnx” — told Cointelegraph that the website was built using the public data published as a result of Celsius’ legal operations. The source further remarked that the data on the website shouldn’t be considered as a leak, although they noted that releasing this information may have consequences similar to the Ledger data leak that occurred in Dec. 2020. “This data has been made public by Celsius. Whether we like it or not, it is a fact,” Aznx said.
According to Garetson, sites like these are uncommon when it comes to bankruptcy proceedings. However, he mentioned that such occurrences may arise from high-profile events that generate specific media attention, or the attention of a particular community. Indeed, Avnx mentioned that Celsiusnetworth.com was designed to create a “buzz,” rather than making it easy for individuals to explore losses of Celsius Creditors. Avnx said:
“For example, the Twitter button is a humorous approach, although nothing is funny in these events. Yet this creates a buzz to highlight several things, such as the fact that this information has been revealed, the amounts lost, or the balances of certain strategic people within Celsius.”
In any case, the information revealed via the Celsiusnetworth.com website has resulted in unintended consequences for many Celsius users.
For example, John Carvalho Jr., a Celsius user based in Massachusetts, told Cointelegraph that his personal information released on Celsiusnetworth.com resulted in a large amount of chaos, particularly on Crypto Twitter.
Carvalho explained that he has the same name as the CEO of Synonym, which is a Bitcoin (BTC) software company. As a result of information being made public, multiple users on Crypto Twitter assumed that John Carvalho — the…
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