A co-founder of Celsius Network (1) filed a lawsuit asking the judge to declare "worthless" all of his shareholdings in the troubled cryptocurrency business. Daniel Leon (2), a co-founder of Celsius, was represented by the law firm Kirkland & Ellis LLP (3) in a declaration filed with the United States Bankruptcy Court.
The declaration confirmed Daniel Leon's status as a substantial shareholder and stated that his 32,600 common shares should now be considered worthless. When shareholders of a corporation believe or recognize that they will not get any additional distribution from their ownership, they declare that a particular stock or common share is "worthless."
When the taxpayer can demonstrate that security had value at the end of the year, which leads to a deduction year, and an identifiable event result in a loss in the deduction year, the security is considered worthless. A month after the withdrawals were stopped owing to the volatile market, the troubled crypto lender filed for Chapter 11 bankruptcy in July.
The co-founder of Celsius Network intends to use the statement as a tax write-off, according to BnkToTheFuture CEO Simon Dixon, who suggested in a tweet. Celsius Network's private equity shares are now "officially worthless."
After a month-long filing that predicted the company would run out of money by October, Celsius Network raised two rounds of private equity financing for smaller investors through BnkToTheFuture (4). A revised forecast will likely show the company has managed to secure extra breathing room.
The company presently has just over $111 million in cash, and according to the most recent prediction submitted to the bankruptcy court on Tuesday, there will only be $42 million in cash remaining by the end of November.
While many people speculated about Celsius's future and potential buyers, reports suggested that Ripple Labs would be interested in buying the assets of the insolvent Celsius Network. However, Ripple Labs (5) merely acknowledged the business by adding that it is curious to learn more about Celsius and its assets and see whether any of them may apply to its business.
The company then emphasized that it has continued to grow exponentially despite a market reset and is actively seeking M&A opportunities for strategically scaling the business, despite Ripple Labs' silence on its position on the Celsius Network assets and its purchase.
According to a June 24 article, Goldman Sachs allegedly thought about helping an investor raise the money needed to buy digital assets linked to the struggling lender. Still, a source later stressed that Goldman had no intention of owning the digital assets and was merely acting as a broker on the investor's behalf.