Unchained Why the Messy 3AC, Celsius, and Voyager Bankruptcies Will Drag on for Years - Ep.377
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Jul 26, 2022 WassieLawyer, an expert in restructuring and insolvency, joins Adam Levitin, a Georgetown Law professor, to dissect the tumultuous bankruptcies of 3AC, Celsius, and Voyager. They delve into the complexities of custodial funds, revealing the risks of commingled deposits. Discussions unveil Celsius's potential shady practices versus Voyager's irresponsibility. They explore the daunting Chapter 11 process, the intricacies of creditor rights, and whether key executives might face jail time, all while navigating the chaotic crypto landscape.
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Custody vs. Earn Deposits
- Customer funds held in 'custody' are supposed to remain the customer's property.
- 'Earn' deposits become loans to the platform, making customers unsecured creditors.
Commingling Creates Uncertainty
- Celsius commingled custody and earn funds, creating uncertainty for customer recovery.
- This commingling makes it harder to determine who owns what in case of a shortfall.
Voyager's Ambiguous Terms
- Voyager's terms were less clear than Celsius', blurring the lines between customer property and loans.
- Even if funds are considered customer property, shortfalls leave customers as unsecured creditors.