Celsius reveals its list of creditors, 3AC NFT, Terra-Luna, Voyager – Attack of the 50 Foot Blockchain

By amy beaver Y david gerard

“Scammers don’t play on moral weakness, greed, or fear; take advantage of weaknesses in the system of checks and balances, audit processes that are intended to complement an overall environment of trust.” — Dan Davies, Lying for Money

krissy and alex mashinsky

How are the crypto markets?

Crypto is a chill market. The desperation is still there, but the cash from other retail consumers to fuel the desperation is gone.

(No, we also have no idea why Bitcoin is stuck around $19,000. We’re guessing it margin call levels such that manipulating the price is cheaper than taking the hit… but that’s just a guess.)

The current cash shortage of the real-world economy will lead to more crypto Ponzi schemes being exposed. Crypto execs are already jumping ship as fast as possible.

As more Ponzi schemes are exposed, expect more crypto operators to disappear. We’re a little surprised that Celsius’s Alex Mashinsky hasn’t disappeared yet.

The future of crypto reporting will be bankruptcies, indictments, criminal trials, and regulations. We’ll be here saying “YES! Hahaha yes!”

Celsius Network: oops, you screwed me bro

Celsius needs to be liquidated, and the sooner the better. There’s no viable business here, the money is gone, and the trickle down of what’s left among the business experts and bankruptcy professionals does nothing to find more money for creditors.

The newly appointed examiner, Shoba Pillay, must remove the veil. We expect any serious third party report on Celsius to be jarring.

An October 7 hearing concerned Celsius’s custody accounts. (We explained the four types of Celsius clients in a previous update.) The court will hold a two-part trial on the custodial accounts on December 7 and 8.

Judge Martin Glenn ordered Pillay to file an interim report on Celsius’s financial management and handling of client accounts. This should come out next month. [CoinDesk]

The report will influence the court’s decisions on custodial accounts and preferential claims. A preference claim, also known as a “repossession,” is filed by the bankruptcy trustee against creditors paid within a specified period before the bankruptcy filing. The term is 90 days for creditors and 1 year for insiders.

If you received money as a Celsius client in the 90 days before you filed for Chapter 11, then this means you: Bankruptcy law says the court and the public need to know who you are. We talked about this in our last update.

So Celsius published its lists of assets and liabilities and financial statements (SOFA) for each of its eight companies. The schedules contain the names and transactions of every Celsius user on the platform, going back 90 days. One of the documents has 14,000 pages. [List of schedules]

The cryptocurrency world was outraged! Celsius was “misleading” his clients, with several on Twitter calling it a “leak” of information. Namcios in Bitcoin Magazine suggested that “laws should prohibit the court from asking for this in the first place.” [Twitter, archive; Twitter, archive; Twitter, archive]

Crypto wants the benefits of laws, but not the responsibilities.

Both Celsius and the UCC wanted to publish this data anonymously, but Judge Glenn made it clear that he was not going to rewrite bankruptcy law for cryptocurrencies. He agreed to redact the clients’ home addresses and email addresses, but the names were to remain a matter of public record. [Claims process FAQ]

Public data is already being reviewed, for example crypto influencers telling Celsius users to simply trust the company and wait, while they withdraw their own funds. [Twitter]

taking care of the team

Celsius’s asset and liability timeline reveals that company executives withdrew at least $17 million in cryptocurrency from the platform before its bankruptcy filing in July.

Mashinsky withdrew around $10 million worth of crypto in May. Celsius co-founder Daniel Leon withdrew about $7 million (and an additional $4 million in CELs called “collateral”) between May 17 and May 31. [Coindesk; FT]

At the same time, Mashinsky was profuse in assuring clients that their funds were safe. The state of Vermont estimates that the company was insolvent as of 2019. [Twitter, archive; Decrypt]

We noted the last time Mashinsky stepped down as CEO. Leon has also resigned. [Coindesk]

Celsius also reported paying former CFO Yaron Shalem more than $200,000 from December 2021 to March 2022. Shalem was fired from Celsius in November 2021, when he was one of 10 people detained by Israeli authorities in connection with an alleged fraud in other crypto companies. [Twitter]

Coffeezilla shows how Mashinsky’s wife, Krissy, pulled $2.7 million worth of crypto from the platform in May. [Twitter]

Mashinsky: Trust me.

The Celsius UCC held a meeting on Twitter spaces right after the Oct. 7 hearing, where White & Case attorney Greg Pesche answered questions from creditors. [YouTube]

Mashinsky joined an unofficial Twitter Spaces meeting on October 5 to explain how easy it should be to get Celsius out of Chapter 11. Mashinsky’s actions have always been far-fetched new schemes to make money. “Returning coins plus mining is enough to be profitable and return all assets to all users, and for that you don’t need any license. Any.” [YouTube]

Why do creditors give this guy their time? Just because they really, really, really want to believe that they will get their money back.

(They will not.)

The next meeting of creditors for Celsius “341” is on October 13 at 10:00 am ET.

Dirty Bubble points out that Celsius also went broke with tens of millions of dollars in Badger DAO restitution after the DAO was exploited in December 2021. [Twitter; Medium post]

Capital of the three arrows

Teneo, the business advisory firm leading the Three Arrow Capital (3AC) liquidation, now has in its hands the extensive collection of NFTs owned by Starry Night Capital, a fund created by 3AC and the pseudonym Vincent Van Dough. [Twitter] Teneo somehow managed to get Van Dough to fully cooperate with them. [Teneo letter, PDF; Decrypt]

Here is Van Dough proudly announcing his association with the founders of 3AC in August 2021. [Twitter, archive]

Most of the collection: 464 NFT so far! – has already been moved to a new wallet on OpenSea. There are many gems to behold here, including a wide variety of Rare Pepes. Although we are a bit disappointed not to see our friend CryptoDickButt #1462 there. [OpenSea wallet]

Starry Night spent at least $35 million worth of crypto on NFTs, because NFTs are clearly a brilliant investment for a leading crypto hedge fund! Teneo plans to sell the assets to recover money from 3AC’s creditors. It’s a shame that the NFT market has completely collapsed and died, as Amy recently pointed out on Artnet. [Dune Analytics]

Teneo has created a website with updates on the settlement. No word yet on where 3AC founders Su Zhu and Kyle Davies landed. [3acliquidation.com]


South Korea is clipping Do Kwon’s wings. His passport has been revoked, which should put a damper on his ability to travel, even as he insists he is not on the run. This is with South Korea having already issued an Interpol Red Notice for Kwon. [Notice, Korean; Techcrunch]

Kwon claims that South Korea did not freeze its cryptos. [Twitter]

Prosecutors also requested an arrest warrant for Yoo Mo, the general head of affairs at Terraform Labs, who allegedly used bots to launder trade and manipulate cryptocurrency prices, in violation of the Capital Markets Law. The order was denied, but the prosecutor’s office is considering reapplying. [JTBC, in Korean; Yonhap News, in Korean; The Block]

digital traveler

Wave Financial is one of the companies that bid for the Voyager assets but lost out to FTX US, who we had pegged to win the auction all along. We’re not even sure what the point of the two-week blind auction was. Client lists?

Voyager Digital is angry about Wave Financial’s interview with Cointelegraph. In the Sept. 28 article, Wave said there were better deals on the table, but they were “overlooked for strictly cash deals.” [CoinTelegraph]

Voyager filed a lengthy response with the court, saying that Wave never made a qualifying offer: [Filing, PDF]

If better offers were available, Voyager would have accepted them. Wave’s false statements appear to be a publicity stunt in an attempt to regain lost credibility in the market as a result of its weak Auction performance.

We think Voyager protests too much.

Voyager’s next omnibus meeting is on October 19.

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