The value of the shares that are still in circulation may or may not be affected by Leon’s court declaration.
A co-founder of Celsius Network has asked the court to deem “worthless” the totality of his ownership holding in the troubled cryptocurrency business.
The legal firm Kirkland & Ellis LLP submitted a declaration to the United States Bankruptcy Court on Monday on behalf of Celsius Co-Founder Daniel Leon, confirming his status as a substantial shareholder and stating that his 32,600 common shares are currently regarded as worthless.
#CelsiusNetwork #CelsiusBankruptcy Here’s a new one — a declaration of “wothlessness” was just filed by Daniel Leon , one of the cofounders. The Declaration was filed by K&E. https://t.co/OHldovdhBZ
— David Adler (@DavidJAdler1991) September 5, 2022
A stock or common share is generally declared to be “worthless” when shareholders believe they won’t get any future payout for their ownership.
If a taxpayer can demonstrate that a security had value at the end of the year prior to the deduction year and that an identifiable event resulted in a loss in the deduction year, the IRS deems the security to be worthless.
A month after stopping withdrawals because of “extreme market conditions,” the troubled cryptocurrency lender filed for Chapter 11 bankruptcy in July.
In a Monday Twitter post, CEO of BnkToTheFuture Simon Dixon made the assertion that the declaration renders Celsius Network private equity shares “officially worthless” and that the co-founder intends to claim them as a tax deduction.
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
Through BnkToTheFuture, Celsius raised two rounds of private equity funding from smaller investors.
The funding runway for Celsius Network looks to have expanded in the meantime. A fresh forecast seems to indicate that the corporation has managed to gain extra breathing room, even though a filing from last month predicted the company would run out of money by October.
According to the most recent prediction, dated August 31 and submitted to the United States Bankruptcy Court on Tuesday, the company now has little over $111 million in cash and expects to have $42 million by the end of November.