crypto

Crypto Winter Means Hard Work for Bankruptcy Lawyers (Podcast)

Bankruptcy law is the ultimate countercyclical industry: business is booming when when things get bad. And things have almost never been worse in the crypto world, with even the most prominent coins down more than 40% in just the past year.

Listen here and subscribe to On The Merits on Apple Podcasts, Spotify, Google Podcasts, Megaphone, or Audible.

Numerous crypto platforms—Voyager Digital, Celsius, BlockFi, and, most famously, FTX—have filed for Chapter 11. That means bankruptcy attorneys have a lot of work on their plates.

Bloomberg Law spoke to more than half a dozen of the attorneys working on these cases to hear if managing a crypto bankruptcy is just another day at the office. They say nothing in their careers prepared them to unwind what were essentially quasi-banks dealing with some of the most volatile financial assets known to humankind.

“I knew that they would present novel issues of law and technology,” White & Case lawyer Greg Pesce, who’s working on the Celsius bankruptcy, told us. “And that couldn’t begin to describe what we confronted.”

On this special episode of our weekly podcast, On The Merits, we hear what it’s like to be an attorney

… Read the rest
March 28, 2023 by ATTORNEY

Celsius Network chooses NovaWulf bid for bankruptcy exit

Feb 15 (Reuters) – Crypto lender Celsius Network will seek to exit bankruptcy under the guidance of asset manager NovaWulf Digital Management, which will take over the operations of a new company that will be owned by Celsius customers, the company said at a court hearing in Manhattan on Wednesday.

The proposed deal with NovaWulf should allow Celsius to exit Chapter 11 and begin returning crypto assets to customers in June, Celsius attorney Ross Kwasteniet said at Wednesday’s hearing.

Celsius selected NovaWulf’s bid out of more than 130 proposals received, saying that NovaWulf was the only finalist that intended to maintain long-term control over Celsius’ harder-to-liquidate assets, like its loan portfolio and bitcoin mining business.

Those assets would be owned by Celsius creditors and managed by NovaWulf under a profit-sharing agreement if U.S. Bankruptcy Judge Martin Glenn, who is overseeing Celsius’ Chapter 11 process, and creditors sign off on the deal.

Latest Updates

View 2 more stories

Crypto lenders such as Celsius boomed during the COVID-19 pandemic, drawing customers with the promise of high interest rates on their cryptocurrency deposits and the ability to borrow against their crypto assets. But many companies in the highly interconnected sector went bankrupt

… Read the rest
February 19, 2023 by ATTORNEY

FTX Bankruptcy Lawyers Say Independent Examiner Would Put Assets at Risk

The judge overseeing the FTX bankruptcy proceeding still hasn’t decided whether he will appoint an independent examiner after a 4-hour hearing that included testimony from FTX CEO John Ray III.

Judge John Doresey, who’s overseeing the bankruptcy proceedings, said Monday he’s asked the attorneys representing FTX, the unsecured creditor committee, U.S. Trustee and the Joint Public Liquidators of the Bahamas to discuss “a consensual resolution.” The next FTX court hearing is scheduled for Wednesday, but there’s no sign yet the judge will make a ruling then.

Ray was appointed when crypto exchange FTX filed for bankruptcy and founder Sam Bankman-Fried stepped down on November 11. The company, once an influential giant in the industry, is accused of having commingled client funds with those of its sister company, Alameda Research—a crypto trading firm also founded by Bankman-Fried.

Ray said during his testimony on Monday that he and his team have been fielding daily requests from state and federal investigators. Ray also testified that he did not find examiner’s reports helpful in two prior bankruptcies he’s overseen, Enron and Residential Capital, adding that “the reports were somewhat ambivalent in the conclusionary sense.”

The FTX legal team has been arguing that the cost

… Read the rest
February 13, 2023 by ATTORNEY

Sam Bankman-Fried’s sudden turn from white knight to detainee

By Hannah Lang

(Reuters) – The sudden fall from grace and arrest of FTX’s former CEO Sam Bankman-Fried has stunned investors and crypto enthusiasts who once hailed the 30-year-old American as the savior of the industry.

Bankman-Fried was charged by the U.S. Securities and Exchange Commission (SEC) on Tuesday with defrauding investors in what regulators called “a house of cards,” hours before he was set to appear before a magistrate in the Bahamas.

The fallen crypto entrepreneur was arrested by Bahamian authorities late on Monday at the request of the U.S. government, U.S. Attorney Damian Williams said in a statement. The Bahamian attorney general said in a separate statement the United States was likely to request his extradition.

Bankman-Fried amassed billions of dollars in personal wealth running FTX, one of the world’s largest crypto exchanges that was valued earlier this year at $32 billion.

Since stepping down, Bankman-Fried has said he no longer has a role at the company. Yet he also told a Vox reporter he believed FTX’s bankruptcy filing was a mistake and has suggested on Twitter and in media interviews that he can still raise liquidity to repay customers. He did not specify how he planned to

… Read the rest
December 16, 2022 by ATTORNEY

Bankruptcy lawyers stand to benefit greatly from crypto turmoil – report

Bankruptcy lawyers stand to benefit greatly from crypto turmoil – report

Bankruptcy lawyers stand to benefit greatly from crypto turmoil – report

wutwhanfoto/iStock via Getty Images

The cryptocurrency ecosystem has experienced a major downturn in the past year, sending the value of even the most prominent digital tokens plunging and triggering a slew of high-profile bankruptcies. On the flip side, law firms that council those struggling companies were said to have been raking in huge fees.

Bankruptcy lawyers, meanwhile, stand to gain from crypto exchange FTX’s recent Chapter 11 bankruptcy, which sent fresh shockwaves through the cryptoverse. Other noteworthy bankruptcies from earlier in 2022 included crypto hedge fund Three Arrows Capital and crypto lenders BlockFi, Voyager Digital (OTCPK:VYGVQ) and Celsius Network.

Generally, large law firms can collect over $100M in legal fees during a prolonged bankruptcy, Reuters reported Friday, citing experts.

For bankruptcy cases involving crypto-related firms, law firm Kirkland & Ellis is counseling BlockFi after it filed for Chapter 11 bankruptcy protection on Monday, and also represents Celsius and Voyager Digital (OTCPK:VYGVQ). The fees that Kirkland commands are some of the biggest rates in the industry, charging up to $1,995 per hour for work on the Celsius and Voyager cases, Reuters noted, citing court filings.

Previously, (Nov. 11) FTX’s Bankman-Fried resigned as CEO as crypto exchange starts Chapter 11 bankruptcy.

… Read the rest
December 8, 2022 by ATTORNEY
December 2024
M T W T F S S
 1
2345678
9101112131415
16171819202122
23242526272829
3031