Celsius Network Files ‘Adversary Complaint’ Against EquitiesFirst to Recoup Assets

Bankrupt crypto lender Celsius Network submitted an “adversary complaint” against EquitiesFirst Holdings on Wednesday, as per the confidential adversary complaint.

The moves come as Celsius attempts to recoup assets from the private lender which reportedly owes $439 million. The debt comprises $361 million in cash and 3,765 BTC as of July 2022.

EquitiesFirst: The ‘Mysterious’ Debtor to Celsius

The filing stated that Celsius is seeking injunctive relief and a declaratory judgment related to the “recovery of money/property,” as indicated in the docket’s title. The complaint lists EquitiesFirst and its CEO, Alexander Christy, as defendants.

Founded in 2002, EquitiesFirst “specializes in long-term asset-backed financing” and manages stock but started crypto-collateralized loan services in 2016. Three years later, Celsius sought financial assistance from EquitiesFirst to “support its operations,” but their overcollateralized crypto loan encountered difficulties by 2021.

Earlier this July, reports surfaced disclosing that the Indianapolis-headquartered private lending platform was the mysterious debtor to Celsius, owing a sum of $439 million to the troubled firm.

In addition to adversary complaint filing, Celsius also submitted a summons on the same day, mandating that EquitiesFirst present a motion or response within a 35-day timeframe.

A Year After Bankruptcy

Amidst the cryptocurrency market’s sharp decline last year, Celsius emerged as one of the early casualties, seeking Chapter 11 bankruptcy protection in July 2022. A year later, the co-founder and former CEO, Alex Mashinsky, was arrested and is now facing several charges, which include securities fraud and the manipulation of the company’s native CEL token.

Shortly thereafter, the Federal Trade Commission imposed a hefty $4.7 billion fine on Celsius for allegedly deceiving users, but the judgment was temporarily halted to allow the platform to incorporate these funds into its bankruptcy proceedings.

In mid-August, Judge Martin Glenn of the Southern District of New York Bankruptcy Court approved a motion enabling Celsius creditors to vote on a proposed settlement plan that, if given the green light, would involve a consortium known as Fahrenheit acquiring the beleaguered lender’s assets and reimbursing creditors through the establishment of a new company.

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