It should be noted that not only Celsius, but also a popular cryptocurrency fund called Three Arrows Capital is facing bankruptcy and liquidation. The day before, details of its legal proceedings surfaced online – and the data really surprised.

In particular, it turned out that the creditors of the 3AC fund turned out to be co-founder Su Zhu himself, as well as the wife of second co-founder Kyle Davies, with $5 million and $65.7 million owed to them respectively.

Three Arrows Capital CEO Su Zhu

Meanwhile, Genesis lent $2.36 billion to 3AC yesterday. Accordingly, some of the fund’s clients may end up getting their money.

Celsius, on the other hand, has a far worse situation.

What’s going on with the Celsius platform?

According to news outlet CryptoSlate, provided by lawyers in the Celsius case, interested parties in the litigation should be prepared for a long wait. Here is the relevant rejoinder with which the experts share their perspectives on the developments.

Clients should prepare for a thorny path while they wait to determine the fate of their funds.

In other words, a positive outlook is generally out of the question. Which means that in such a case one is really unlikely to be able to count on a quick compensation for losses.

Recall that Celsius announced the suspension of withdrawals, swaps and transfers on the platform back on June 12, 2022, citing “extreme market conditions”. A few weeks before that, there had been rumours that the company was facing financial difficulties amid a severe bearish trend.

The home page of the Celsius Network website has this bankruptcy notice

Some investors remained hopeful that Celsius would be able to maintain its solvency in the near future. However, as early as 14 July – a month after its operations were suspended – the company filed for bankruptcy under Part 11 of the US Bankruptcy Code. This type of bankruptcy is known as a “reorganisation” and allows the company to stay in business while it restructures its debts.

Bankruptcy lawyers have said that with “little precedent” for large cryptocurrency companies filing under Part 11, as well as ongoing litigation against the company and other complexities, the process is sure to be lengthy. Here’s how Barnes & Thornburg law firm partner James Van Horn commented on the situation.

Even at best, it is not yet known how the Bankruptcy Code can be applied to a cryptocurrency company and how to litigate its case.

Accordingly, one of the barriers to a quick resolution is the relative newness of the cryptocurrency industry. As such, the procedure will involve some first-time actions - and this will trigger a more detailed analysis, which takes time.

Davis Wright Tremaine partner Stephen Gannon has described the process as a “three dimensional chess game”. It will take at least six months, he said. Business restructuring lawyer Daniel Gwen said Celsius had treated customer deposits as a transfer of ownership, rather than a custody agreement along the lines of depositing money in a bank. Gwen added that this would classify users as unsecured creditors. Here is his quote.

Celsius has indicated in its documents that customers have transferred ownership of the crypto assets to Celsius, making those customers unsecured creditors.

Celsius Network token exchange rate

As a reminder, in bankruptcy proceedings, priority in recovery is usually given first to secured creditors, then to unsecured creditors and then to equity holders. In any case, it is unlikely that Celsius’ clients can expect any compensation, at least by the end of this year, analysts say.


We believe that the current situation should once again remind cryptocurrency enthusiasts that they should never entrust all of their digital assets to centralised platforms, including cryptocurrency exchanges. However, in the event of unusual circumstances, access to assets can easily be lost - and end up having to wait for an indefinite period of time. So it's better to keep some of your coins in a hardware wallet, and at the same time send them to a stacker.