Bankrupt crypto lender Celsius Network has filed a complaint against lending firm EquitiesFirst Holdings in a bid to recoup assets.
According to a sealed adversary complaint filed on Sept. 6, Celsius is seeking injunctive relief and a declaratory judgment associated with the “recovery of money/property” — according to the title of the docket.
The filing named both EquitiesFirst and its CEO Alexander Christy as defendants. Additionally, Celsius filed a summons on the same day, requiring that the private lender provide a motion or answer within 35 days.
The sealed adversary complaint filed against EquitesFirst Holdings. Source: Stretto
EquitiesFirst Holdings is an Indianapolis-based private lending company that reportedly owed Celsius Network $439 million as of July 2022.
Celsius first began taking collateralized loans from EquitiesFirst in 2019 to “support its operations” owing to what Alex Mashinsky described in a subsequent bankruptcy filing as a “lack of institutional lending available to cryptocurrency companies,” at the time.
However, in July 2021, Celsius Network sought to retrieve the collateral it had pledged to EquitiesFirst but was informed that the lender could not return the amount Celsius had provided.
As of July 2021, Celsius was owed a total of $509 million by EquitiesFirst. The increase from $439 million to $509 million was due to the loans being over-collateralized. Since September 2021, the debt has been slowly repaid at a rate of $5 million per month.
As of July 2022, EquitiesFirst owed Celsius $439 million, with the debt being comprised of $361 million in cash and 3,765 Bitcoin (BTC).
Celsius’ former CEO Alex Mashinky was arrested on July 13 this year, with authorities accusing him of misleading Celsius users and defrauding investors out of billions of dollars.
Notably, The Federal Trade Commission issued Celsius with $4.7 billion in fines for allegedly “duping” users, but suspended the judgement in order for the platform to use the assets as part of its bankruptcy proceedings.
Celsius creditors are currently voting on a settlement plan that — if approved — would see a consortium called Fahrenheit buy Celsius’ assets and return Celsius creditors funds by way of launching a new company.
Alex Mashinsky, the founder and former CEO of the now-defunct cryptocurrency lending platform Celsius, faces a 20-year prison sentence as the US Department of Justice (DOJ) is seeking a severe penalty for his fraudulent activity.
The US DOJ on April 28 filed the government’s sentencing memorandum against Mashinsky, recommending a 20-year prison sentence due to his fraudulent actions leading to multibillion-dollar losses by Celsius customers.
The 97-page memo mentioned that Celsius users were unable to access approximately $4.7 billion in crypto assets after the platform halted withdrawals on June 12, 2022.
“The Court should sentence Alexander Mashinsky to twenty years’ imprisonment as just punishment for his years-long campaign of lies and self-dealing that left in its wake billions in losses and thousands of victimized customers,” the DOJ stated.
Mashinsky’s personal benefit was $48 million
In addition to listing massive investor losses resulting from the Celsius fraud, the DOJ mentioned that Mashinsky has personally profited from the fraudulent schemes in his role.
As part of his plea in December 2024, Mashinsky admitted that he was the leader of the criminal activity at Celsius, that his crimes resulted in losses in excess of $550 million, and that he personally benefited more than $48 million, the authority said.
An excerpt from the government’s sentencing memorandum against Celsius founder Alex Mashinsky. Source: CourtListener
The DOJ emphasized that Mashinsky’s guilty plea showed that his crimes were “not the product of negligence, naivete, or bad luck,” but rather the result of “deliberate, calculated decisions to lie, deceive, and steal in pursuit of personal fortune.”
This is a developing story, and further information will be added as it becomes available.
The concept of a Russian ruble stablecoin received special attention at a major local crypto event, the Blockchain Forum in Moscow, with key industry executives reflecting on some of the core features a ruble-backed stablecoin might require.
Sergey Mendeleev, founder of the digital settlement exchange Exved and inactive founder of the sanctioned Garantex exchange, put forward seven key criteria for a potential “replica of Tether” in a keynote at the Blockchain Forum on April 23.
Mendeleev said a potential ruble stablecoin must have untraceable transactions and allow transfers without Know Your Customer (KYC) checks.
However, because one of the criteria also requires the stablecoin to comply with Russian regulations, he expressed skepticism that such a product could emerge soon.
The DAI model praised
Mendeleev proposed that a potential Russian “Tether replica” must be overcollateralized similarly to the Dai (DAI) stablecoin model, a decentralized algorithmic stablecoin that maintains its one-to-one peg with the US dollar using smart contracts.
“So, any person who buys it will understand that the contract is based on the assets that super-securitize it, not somewhere on some unknown accounts, but free to be checked by simple crypto methods,” he said.
Source: Cointelegraph
Another must-have feature should be excess liquidity on both centralized and decentralized exchanges, Mendeleev said, adding that users must be able to exchange the stablecoin at any time they need.
According to Mendeleev, a viable ruble-pegged stablecoin also needs to offer non-KYC transactions, so users are not required to pass their data to start using it.
“The Russian ruble stablecoin should have the opportunity where people use it without disclosing their data,” he stated.
In the meantime, users should be able to earn interest on holding the stablecoin, Mendelev continued, adding that offering this feature is available via smart contracts.
Russia opts for centralization
Mendeleev also suggested that a potential Russian version of Tether’s USDt (USDT) would need to feature untraceable and cheap transactions, while its smart contracts should not enable blocks or freezes.
The final criterion is that a potential ruble stablecoin would have to be regulated in accordance with the Russian legislation, which currently doesn’t look promising, according to Mendeleev.
Sergey Mendeleev at the Blockchain Forum in Moscow. Source: Bits.Media
“Once we put these seven points together […] then it would be a real alternative, which would help us at least compete with the solutions that are currently on the market,” he stated at the conference, adding:
“Unfortunately, from the point of view of regulation, we are currently going in the absolutely opposite direction […] We are going in the direction of absolute centralization, not in the direction of liberalization of laws, but consolidation of prohibitions.”
Possible solutions
While the regulatory side is not looking good, a potential Russian version of USDT is technically feasible, Mendeleev told Cointelegraph.
“Except for anonymous transactions, everything is easy to implement and has already been deployed by several projects, but it’s just not unified in one project yet,” he said.
The crypto advocate specifically referred to interesting opportunities by projects like the ruble-pegged A7A5 stablecoin, unblockable contracts at DAI, and others.
Regulation is necessary but not enough, Mendeleev said, adding that the most difficult part is the trust of users who must see the ruble stablecoin as a viable alternative to major alternatives like USDT.
Elsewhere, the Bank of Russia has continued to progress its central bank digital currency project, the digital ruble. According to Finance Minister Anton Siluanov, the digital ruble is scheduled to be rolled out for commercial banks in the second half of 2025.
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