Celsius Distributes $3B Post-Bankruptcy, Ripple Issues, and Web3's Security Woes
Summary:
Celsius, a cryptocurrency lending firm, is preparing to distribute $3 billion worth of assets to its creditors as it exits bankruptcy. Ripple Chairman, Chris Larsen, lost 213 million XRP tokens in a recent hack while the Web3 ecosystem suffered security incident-related losses of $38.9 million in January 2024. Terraform Labs hopes its Chapter 11 bankruptcy can help appeal an SEC lawsuit, arguing that its crypto assets aren't legally considered securities.
Emerging from Chapter 11 bankruptcy in the U.S., Celsius is preparing to distribute crypto and fiat assets worth $3 billion to its creditors. Hackers stole 213 million XRP tokens from Ripple chairman, Chris Larsen according to blockchain investigator, ZachXBT. Simultaneously, the Web3 ecosystem in the initial month of 2024 faced losses amounting to $38.9 million due to multiple security breaches.
Crypto-lending firm, Celsius, is gearing up to distribute crypto and fiat assets totalling $3 billion to its creditors. Additionally, it also plans to create a new Bitcoin mining enterprise. Celsius has stated that Ionic Digital would "proceed with distributions to the creditors." Their shares are set to be publicly traded following necessary approvals.
Completing its restructuring process, Celsius was successfully able to exit bankruptcy on January 31, 2024. Approximately 98% of creditors backed the plan to exit bankruptcy which happened a year and a half after suspending withdrawals in June 2022 followed by a bankruptcy filing the next month. Celsius reportedly increased the amount of crypto ready for creditor distribution by around $250 million. This was achieved through conversions of altcoins to BTC or ETH and via previous settlements.
In an unfortunate event, Ripple chairman, Chris Larsen, suffered a hack resulting in the loss of 213 million XRP tokens, worth nearly $112.5 million. Larsen confirmed the intrusion on his individual XRP accounts, declaring that measures were taken swiftly to identify the problem and alert concerned exchanges to freeze the impacted addresses. The issue has now escalated to law enforcement.
Unexpected exploitation and theft are common in the crypto sphere. A study by PeckShield reveals that more than 600 significant hacks occurred in 2023 leading to a loss of $2.61 billion. The silver lining being, recovery of over $674 million.
Security firm Quantstamp, specializing in decentralized finance (DeFi), reported that various Web3 projects saw losses amounting to $38.9 million in January 2024. This included incidents like scams, key compromises, and smart contract hacks. Notable protocols bearing significant losses included Radiant Capital, Gamma Strategies, Wise Lending, Socket, and Goledo Finance.
Terraform Labs, led by Do Kwon and responsible for the defunct stablecoin, TerraClassicUSD (USTC), stated its Chapter 11 bankruptcy filing may assist in appealing a lawsuit from the Securities and Exchange Commission. Terraform's CEO, Chris Amani, said that an usual appeal against the SEC entails providing a "supersedeas bond" equalling 110% of the judgment total. However, the firm's bankruptcy protection could circumvent this need.
They will challenge the SEC's jurisdiction, arguing that the firm’s crypto assets aren’t securities by legal definition. Success would reportedly "eliminate the biggest claim" against Terraform Labs and be a milestone towards reimbursing the creditors. Terraform Labs declared bankruptcy on Jan. 21 at a Delaware Bankruptcy Court. Concurrently, SEC's case against a crypto firm called Debt Box is facing dismissal, after the SEC possibly ran into penalties due to inaccurate case details.
Published At
2/1/2024 12:17:58 PM
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