BitBoy Founder Threatens Celsius With Class-Action Lawsuit

BitBoy Crypto founder Ben Armstrong said he intends to file a class-action lawsuit against lending platform Celsius and its chief executive.

According to Armstrong, Celsius does not allow him to repay loans with funds that are already on the platform and requires him to enter new funds to do this, despite the fact that there is enough money in the accounts to repay the loans.

With these actions, Celsius resembles an insolvent company from which users cannot withdraw their money, but are asked to deposit even more money, Armstrong wrote.

So far, Armstrong is collecting all the necessary documents, information about the loan and other materials for a class action. Co-plaintiffs have not yet been added.

According to Cointelegraph, Celsius is either struggling with insolvency or experiencing serious liquidity problems as a result of the crypto market crash. The firm suspended withdrawals on June 13 and also reportedly shifted about $320 million worth of assets to repay loans and avoid liquidation on decentralized finance (DeFi) platforms like AAVE.

However, one problem with a potential lawsuit is that if Celsius files for bankruptcy, it would trigger a provision called “automatic stay” that would prevent creditors from collecting against the firm.

Celsius reportedly hired restructuring lawyers from Akin Gump Strauss Hauer & Feld to find possible solutions to its financial problems, but Armstrong says such lawyers “specialize primarily in preparing companies for bankruptcy.”

“Even if Celsius does file for bankruptcy, we have identified some potential workarounds to still file a class action lawsuit (which was not affected by the bankruptcy),” Armstrong said.

In terms of refunds from Celsius, at least users with less than $25,000 on the platform have the potential to receive their assets in the near future.

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