A co-founder of Celsius has sought a court to declare all of his shareholding in the bankrupt crypto lending company Celsius “worthless.” On behalf of Celsius co-founder Daniel Leon, the legal team at Kirkland & Ellis LLP on Monday submitted a declaration to the United States Bankruptcy Court confirming that Leon is a significant shareholder and that his 32,600 common shares are now recognised as worthless. Normally, a stock or common share is deemed “worthless” when shareholders feel they won’t receive any future compensation for their holding.
— David Adler (@DavidJAdler1991) September 5, 2022
The IRS considers a security to be worthless if a taxpayer can show that it had value at the end of the year before the deduction year and that a loss occurred during the deduction year as a consequence of an identifiable event. The troubled crypto lender filed for Chapter 11 bankruptcy in July, a month after ceasing withdrawals due to “extreme market circumstances.”
The co-founder of Celsius Network aims to write off his private equity investments as a tax deduction, according to the CEO of BnkToTheFuture, Simon Dixon, who claimed as much in a Monday tweet. Celsius received two rounds of private equity fundraising from smaller investors via BnkToTheFuture.
I guess this is the official update that @CelsiusNetwork shares are officially worthless & the co-founder wants to use them as a tax write-off. At least shareholders understood the risks though it’s still painful for the community that invested in them. https://t.co/W9Q2GuCU9H
— Simon Dixon (Beware Impersonators) (@SimonDixonTwitt) September 6, 2022
The financing period for Celsius Network appears to have grown since then. Even though a file from last month forecasted the firm would run out of money by October, a new prediction seems to show that the company has managed to obtain more breathing room.
The business now has a little over $111 million in cash and anticipates having $42 million by the end of November, according to the most recent forecast, dated August 31, which was presented to the United States Bankruptcy Court on Tuesday.
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