The developments surrounding the bankruptcy of Celsius Network have caused much controversy worldwide, and certainly also in the Netherlands. More and more Dutch companies and individuals who used the crypto platform are facing claims from the US receiver. What does this mean for you, and how can you best prepare for possible legal proceedings and consequences? In this article, we explain what is involved, the risks and opportunities, and how you can act effectively as a company or individual.
Background: the bankruptcy of Celsius and the international impact
Celsius Network was one of the largest international crypto service providers. Customers could deposit their digital assets on the platform in exchange for attractive interest rates. In July 2022, Celsius filed for bankruptcy in the United States after it fell on hard times due to risky investments and a 'bank run' of customers seeking to withdraw their assets, among other things. The consequences were felt worldwide, including for Dutch customers.
US trustee claims repayment of withdrawals
Following the bankruptcy, a US receiver was appointed to recover as many assets as possible for the joint creditors. Meanwhile, Dutch customers who made large withdrawals from the Celsius platform in the 90 days before the bankruptcy are also being approached. The trustee argues that these withdrawals are unjustified under US bankruptcy law because they would have disadvantaged other creditors. In practice, this means that as a Dutch customer, you may receive a subpoena demanding that you repay (part of) the amount withdrawn to the estate of Celsius. This is also known as a claw-back claim.
Doing nothing is not an option
After receiving a subpoena, sitting still is not a wise choice. If you do not respond, chances are that the US court will issue a default judgment against you. The trustee will then probably try to enforce this judgment in the Netherlands, possibly through the disguised exequatur procedure of Section 431(2) Rv. The trustee will argue that the requirements set out in case law have been met. There is also the question of whether legal remedies are still available against the US default judgment, or whether these deadlines have expired without being informed in time. Despite possible formal defences, the risk of enforcement in the Netherlands remains. Conducting an enforcement dispute is also costly, especially against a US trustee being assisted by a US law firm in an international matter.
What can you do?
Given the risks, it is wise to seek legal help in good time to determine your legal position and - if possible - avoid a default judgment. This can be done, for example, by consulting with the US receiver's lawyers and pressing for a stay of proceedings. It can then be considered whether negotiations make sense. An advantage in this bankruptcy is that several distributions have already been made to creditors, which can usually be taken into account in negotiations.
It is also efficient as a defendant to connect with other parties in the same situation. By uniting informally, the size of the group can be determined and how best to represent it. Given the size of the bankruptcy, it is quite conceivable that the US trustee may ultimately prefer a collective settlement to litigation or settlement on an individual basis.
How can TK help you?
Our team has extensive experience in international bankruptcy proceedings, contract law and dispute resolution. We can advise you on your legal position, guide you in negotiations with the receiver and assist you in proceedings at home and abroad. We can also support you in drafting defences and negotiating a possible settlement.
More information.
Are you a Dutch client approached by the trustee of Celsius or do you have questions about international bankruptcy proceedings? Then contact our office for a no-obligation consultation. We will be happy to think with you about a suitable solution for your situation.
