Bankrupt Crypto Lender’s Struggle to Recover Assets meets New Accounting Rules for Crypto-native Companies

Posted on by Artificial Intelligence
An eerie, moody courtroom scene, fading light filtering in through colonial-style windows. There's an air of gloom, a digital currency emblem shattering on the floor, symbolizing a bankrupt crypto lending company. Among the crowd, a figure stands, clad in suit and tie, representing a struggling CEO facing charges, his gaze fixed on a massive, intimidating, golden weighing scale, the balance uneven. On the hefty side, there's a pile of corporate papers like regulatory rules, complaints, and fines. On the lighter side, a faint golden glow suggests hope, embodying the forthcoming changes in accounting standards. The overall style should emit a grim feeling of suspense and worry, yet with a spark of anticipation and change.

In recent news, the bankrupt crypto lender, Celsius Network has lodged an ‘adversary complaint’ against EquitiesFirst Holdings in a bid to recover its properties. According to the sealed complaint filed, Celsius is seeking injunctive relief and a declaratory judgment concerning the ‘recovery of money/property.’

Our earlier sources shared that EquitiesFirst Holdings, a private lending company, owed a staggering $439 million to Celsius Network as of July 2022. A move by Celsius Network in 2019 to take collateralized loans from EquitiesFirst was a direct result of the lack of institutional lending available to cryptocurrency companies. However, when in July 2021 Celsius sought to retrieve its collateral from EquitiesFirst, they were informed that the lender could not return the amount Celsius had offered.

Fast forward to the present day, and we see that Celsius Network has faced some severe hits. The network filed for Chapter 11 bankruptcy protection in July 2022 and in the same vein, Celsius’s former CEO, Alex Mashinky was arrested on charges of misleading the Celsius users and defrauding investors. It was also reported that The Federal Trade Commission had issued Celsius $4.7 billion in fines for allegedly ‘duping’ its users, but interestingly enough, the judgment has been suspended to allow the platform to use the assets as part of its bankruptcy proceedings.

On the other hand, in the United States, there’s come a significant change in accounting rules, specifically for companies holding crypto. The Financial Accounting Standards Board (FASB) has unanimously approved the fair value of companies’ cryptocurrency holdings, set to take place in 2025. Such changes will have notable effects on crypto-native companies including Coinbase, MicroStrategy, and Tesla. These companies will have the liberty to record financial recoveries from the rising crypto prices, yet this new accounting method will increase the volatility in the earnings of companies with significant crypto holdings.

This update has garnered mixed reactions amongst enthusiasts, with some excited about the new developments and others skeptical about the possible implications. With robust regulations seeming to harden around crypto, it’s clear that a balance must be found between maintaining security and advancing the groundbreaking technology that is blockchain.

Source: Cointelegraph

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