Alexander Hamilton U.S. Custom House, U.S. Bankruptcy Court, Southern District of New York. Credit: ajay_suresh via Wikimedia CommonsBankruptcy Judge Clears Path for Recovery in High-Profile Crypto Failure
“Delays in insolvency proceedings not only frustrate the bankruptcy process, but also increase administrative expenses, which ultimately deplete the recovery for creditors,” said Alan Rosenberg, a partner at Markowitz Ringel Trusty & Hartog.
January 24, 2025 at 02:06 PM
3 minute read
What You Need to Know
- Crypto lender Celsius Network filed for Chapter 11 bankruptcy in 2022, leaving thousands of creditors facing significant financial losses in one of the most high-profile crypto failures to date.
- U.S. Bankruptcy Judge Martin Glenn of the Southern District of New York ruled that a lawsuit against ex-CEO Alex Mashinsky, who faced criminal indictments, could proceed.
- Mashinsky contended that the case should continue to be stayed, citing concerns about prejudicing his Fifth Amendment rights and disrupting related civil proceedings, but Glenn rejected these arguments.
U.S. Bankruptcy Judge Martin Glenn of the U.S. District Court for the Southern District of New York ruled that a lawsuit, in which the plaintiff alleged that Alex Mashinsky, the founder and ex-CEO of Celsius Network, caused the insolvent crypto lender to incur billions of dollars in damages, can move forward because the terms of the agreement to stay stated that it would be lifted when the litigant’s criminal trial ended.
Alan Rosenberg, a partner at Markowitz Ringel Trusty & Hartog, said that while it is understandable that a criminal defendant such as Mashinsky would not want to litigate simultaneously on multiple fronts, bankruptcy courts are "not receptive to stall tactics." Rosenberg also suggested that potential Fifth Amendment issues do not necessarily mandate the stay of a civil action during a pending, related criminal proceeding.
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