Celsius Network, a struggling crypto lending firm that declared bankruptcy in July 2022, has taken legal action against private lending platform EquitiesFirst in an effort to recover assets.

The complaint, filed on September 6 in a sealed bankruptcy document, seeks injunctive relief and a declaratory judgment related to the recovery of money and property, as stated in the bankruptcy docket entry.

Celsius’s co-founder and former CEO, Alex Mashinsky, was arrested in July of this year on charges of fraud, including securities, commodities, and wire fraud, according to the U.S. attorney’s office in Manhattan.

Mashinsky’s assets have been frozen by court order as the criminal case progresses. He appears to have lost control of funds in several bank accounts, including those at Goldman Sachs, First Republic Securities, Merrill Lynch, SoFi Bank, and SoFi Securities.

On the same day as the adversary complaint, Celsius filed a separate summons requesting that EquitiesFirst respond to the complaint within 35 days.

EquitiesFirst Owes $439 Million to Celsius

According to a Financial Times report in 2022, EquitiesFirst owes Celsius $439 million, a significant portion of Celsius’s assets that its customers are relying on to recover some of their lost savings.

EquitiesFirst stated that it is repaying Celsius $5 million per month in cash and Bitcoin (BTC). The details of the debt were first disclosed in Celsius’s bankruptcy filing in July 2022.

Creditors of Celsius Network are currently voting on a separate bankruptcy-escape plan, which involves selling assets to the Fahrenheit consortium as part of the bankruptcy proceedings. If approved, creditors could potentially recover 67% to 85% of their holdings.


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