Celsius Bankruptcy Judge Likely to Refer UK Crypto Consultation Paper

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Crypto Regulation
Celsius Bankruptcy Judge Likely to Refer UK Crypto Consultation Paper

The principal U.S. bankruptcy judge in charge of the Celsius case urged that the Court review the UK crypto consultation paper. Judge Martin Glenn stated that there are no significant court rulings about cryptocurrencies in a document submitted on Monday. 

The Consultation Paper Constituents

In incidents involving cryptocurrencies that could present legal challenges, he suggested the Court might consider the report. Judge Glenn referred to the Law Commission of England and Wales’ most current ‘Digital Assets Consultation Paper.’

The Chief United States Bankruptcy Judge Martin Glenn made mention of the UK cryptocurrency consultation paper in a document submitted on Monday. All interested parties in the Celsius case have access to the consultation paper. The Consultation Report may be in consideration by the Court concerning the legal concerns raised by this lawsuit.

A segment of the document stated that there might not be any authoritative legal precedents in this Circuit, elsewhere in the United States, or other nations where cases arise for many, if not most, cases involving cryptocurrencies.

The document, made public on July 28 but not legally enforceable in the UK, provides provisos for proposed changes to the law, and feedback is welcome until November 4. The idea is to consider cryptocurrencies a brand-new ‘category of personal property.’

In July of this year, cryptocurrency lender Celsius filed for Chapter 11 bankruptcy amid significant withdrawals from its platform. The business had subsequently frozen client accounts. After that, there were other lawsuits.

According to a statement released late last week, the cryptocurrency loan platform Celsius Network has now spent more than $3 million on legal costs.

The expense of the bankruptcy procedures for Celsius Network is an understatement. According to the filing, the law firm Kirkland & Ellis is billing the organisation $2.6 million in fees for defending it from July 13 to July 31.

Akin Gump also assessed the corporation a price of $750,000 for its operations between July 13 and August 31. These astronomical legal bills offer a glimpse into the expenses experienced by crypto businesses, including Voyager Digital, Babel Finance, Vauld Group, and Zipmex, who have filed for bankruptcy. 

These bankruptcy instances are common in the sector, but Celsius Network stands out since it was the first company to cease withdrawals from its network.

Celsius Seems to Be In Damage Control

The Wall Street Journal reported that the founder of the organisation and former CEO, Alex Mashinsky, and his crew led it into bankruptcy while operating with a more significant risk profile than most traditional banks did.

Currently, Celsius Network is looking at ways to reimburse its debtors after filing for bankruptcy with up to $2.8 billion in cryptocurrency debts. The corporation will still need to hire professionals who can guide its restructuring process if it wants to reach an acceptable resolution where the restructuring or liquidation is favourable to the overwhelming majority of its creditors. 

Numerous crypto titans have fallen victim to the ‘crypto winter,’ and supporters of the industry are now interested in how the impacted businesses can finance their bankruptcy processes with highly cushioned finances.