shutterstock 1095344885 The Three Key Chapter 11 Crypto Cases You Need to Know About

The Three Key Chapter 11 Crypto Cases You Need to Know About

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– Chapter 11 is a form of bankruptcy involving the reorganization of a debtor’s business affairs, debts and assets, and is known as reorganization bankruptcy.
– Celsius Network, a peer-to-peer platform for decentralized finance (DeFi), has a $1.2b hole in its balance sheet, according to a recent court filing from the crypto lenders advisory partner Kirkland & Ellis.
– The crypto lender filed for Chapter 11 in the US citing extreme market conditions, leaving its 1.7 million customers unable to redeem their assets, to stabilize the business, its CEO Alex Mashinsky said in a statement.
– As a result the networks native token CEL saw a series of wild price gyrations as investors confidence ebbed and waned.
– Two factors that put the crypto lender in a sticky situation, despite making loan repayments: the use of on-chain leverage and stETH (staked ether).
– Voyager Digital attributed its troubles largely to Three Arrows Capitals financial problems, which prompted Voyager to file for Chapter 11 in the US.
– It served Three Arrows a notice of default in June seeking to recover a $650m debt from the crypto hedge fund operator.
– Sam Bankman-Fried helped Voyager financially by providing it with revolving loans valued at $200m in cash and USDC, and 15,000 BTC. But Voyager still filed for bankruptcy.
– Bankruptcy proceedings could spell longer waits for Voyager customers seeking access to assets held by the company with the frozen trades, withdrawals, and loyalty rewards.
– 3AC, a Singapore-based crypto hedge fund, which invested in tokens such as ETH and SOL, suffered terrible losses because it held a significant position in LUNA when the Terra blockchain collapsed, worth roughly $560m at its peak.
– The founders ran and defaulted on loans after the crypto hedge fund went bust from making a series of large directional trades (GBTC, LUNA, stETH) and borrowing from more than 20 institutions.
– Legal proceedings then moved forward as the founders went MIA. They recently broke their silence, saying they will be moving 3AC to Dubai to see whether the firm has a future.
– 3AC owes over $3bn and Genesis is its biggest creditor with $2.3bn loaned. 3ACs default on debts also contributed to the insolvency of Celsius Network and Voyager Digital.
– A leaked court document showed co-founder Zhu Su made luxury purchases with borrowed money which was likely used to indicate 3ACs creditworthiness.

 

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