Celsius has finally filed for bankruptcy: Law Decoded, July 18–25
Reducing your initial debt of $820 million to just $0.013 over a month can’t be easy. And, it’s hardly surprising that such a heroic dash has led Celsius to bankruptcy. Last week, the crypto lending platform voluntarily filed petitions for Chapter 11 reorganization after closing off the last of its decentralized finance (DeFi) debts owed to Compound, Aave and Maker.
Although a Chapter 11 bankruptcy allows a company to stay in business and restructure its obligations, and there are successful examples such as American Airlines, Delta, General Motors, Hertz and Marvel, some experts voice skepticism regarding Celsius’ chances to stay afloat. The proceedings could mean investors and customers of Celsius may not see their funds returned for the “foreseeable future,” similar to the fallout from the Mt. Gox hack in 2014, which is still ongoing.
And, the external legal pressure surely doesn’t help the platform. With the local Department of Financial Regulation (DFR) reminding users that the firm is not licensed to offer its services in the state, Vermont has become the sixth American state that issued a warning against Celsius.
One point to Ripple in a case against SEC
The United States Securities and Exchange Commission (SEC) has suffered a blow in its case against Ripple after a U.S. judge denied its claims for attorney-client privilege regarding internal documents related to the Hinman speech. In denying the motion, U.S. Magistrate Judge Sarah Netburn called out the SEC’s hypocrisy in arguing that the speech — in which a former official Bill Hinman suggested Ether (ETH) was not security — was a personal matter for Hinman while also claiming it should be protected because he received legal advice from the SEC to confirm the commission’s policies.
Andorra is one step closer to its Digital Assets Act
A tiny European country nestled between France and Spain, Andorra, is swiftly moving to its crypto regulation framework — the respective Digital Assets Act was recently approved by the local government. Although cryptocurrencies are not legal tender in Andorra, and the Digital Assets Act makes no proposals surrounding means of exchange, the CEO of a local Bitcoin (BTC) business highlights that Andorra could adopt a Bitcoin standard, mining Bitcoin with renewable energy, taking on Bitcoin as a reserve asset and welcoming Bitcoin-centric companies from all around the world.
Cryptocurrencies are to become a “financial product” in South Africa
The South African Reserve Bank is set to introduce regulations next year that will see cryptocurrencies classed and treated as financial assets to balance investor protection and innovation. With more than six million people in the country having cryptocurrency exposure, regulation of the space has long been a talking point — it will allow the sector to be monitored for money laundering, tax evasion and terrorism financing. And, of course, to comply with global guidelines set out by the Financial Action Task Force.