Celsius confirmed on July 13 that it had initiated Chapter 11 bankruptcy proceedings in the Southern District Court of New York. by pledging to begin the debt restructuring process But experts are worried that Mt Gox will repeat itself.
from the information of Investopedia Chapter 11 bankruptcy allowed the company to continue its business and debt restructuring. The companies that successfully restructured under Chapter 11 include American Airlines, Delta, General Motors, Hertz and Marvel.
Danny Talwar, head of taxation at crypto accounting software firm Koinly, has expressed his concerns: This could mean that Celsius investors and customers may not get their money back in cryptocurrency. The “near future” is similar to the ongoing impact of the 2014 Mt Gox hack.
“This could be Mt Gox 2.0, where a court ruling can take a long time for clients to get their deposit back.”
“For context, Mt Gox, the largest Bitcoin exchange from 2010 until its collapse in 2014, lost more than 850,000 BTC in deposits,” explains Talwar. “Customers are still waiting for a refund now (in 2022), with litigation in courts in many jurisdictions around the world and in Japan.”
Celsius, in a statement on July 13, said: It aims to use $167 million in cash to continue during the restructuring process. and said it intended to “Restore activity across the platform” and “finally refund customers”.
However, customer withdrawals are still paused “at the moment”.
Adds Alex Mashinsky, Celsius co-founder and CEO.thatThis is “the right decision for our community and company.”
However, Talwar argues that crypto investors should not panic. Because filing for Chapter 11 bankruptcy would give Celsius a commitment to getting their investors back. “And not just disappearing.”
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