Celsius Network Plans Merger of US and UK Entities

Celsius Network, the defunct crypto lender, is planning to merge its United Kingdom and United States entities as new court filings allege that any supposed distinction between the two companies was a “sham.” The move comes after the Financial Conduct Authority (FCA) issued a warning to Celsius Network Limited (CNL) in June 2021 to cease operations in the U.K., prompting the creation of a Limited Liability Company in the state of Delaware to transfer assets to the new company.

According to a court filing from the now-bankrupt crypto firm on May 1, the migration of the two entities “resulted in intercompany chaos.” Formal documentation of the intercompany relationship was “not completed for several months,” and when it was, “it remained ambiguous” what transactions the agreements affected. This confusion was too much for everyday investors to make sense of, but sophisticated Series B investors were aware of the implications of such dubious record keeping, claims the filing.

The Celsius Official Committee of Unsecured Creditors (UCC) has called the migration a “sham,” with transactions that facilitated the transfer of billions of dollars worth of assets between the two likely to be fraudulent. A corresponding court filing from the UCC claims that the two entities should be treated as one in subsequent bankruptcy proceedings, so that smaller creditors are not ignored in favor of Series B investors when it comes to the recovery and return of lost funds.