Celsius Network, the cryptocurrency lending platform has submitted its bankruptcy plan. Only, it doesn’t seem to be delighting retail cryptocurrency borrowers. In fact, angel investor Johan Bronge is among those who have issued a negative reaction to Celsius. Having already borrowed with Bitcoin collateral from Celsius before its bankruptcy, he expressed his concerns in a letter to the court.
Conditions not mentioned in contracts
Johan Bronge has made his concerns clear with reference to the bankruptcy plan drawn up by Celsius Network. He believes that the proposed plan favors institutional lenders, allowing them to repay their loans and recover their collateral in cryptocurrencies. Yet the platform denies the same option to retail borrowers.
Johan Bronge pointed out that these conditions were not specified in the General Terms of Use. They were not included in either the Loan Truth Statement or the Loan Details Summary. He also objected to the use of new terminology such as “Retail Borrower Deposit Claim”. The same applies to the valuation of collateral based on a combination of the date of application and current market prices. In his view, this could lead to a greater loss of cryptocurrency collateral for retail borrowers, beyond the agreed percentage.
Bronge solutions to protect retail borrowers
To remedy these problems, Johan Bronge called for retail borrowers to be offered the option of repaying their loans and recovering their collateral, as institutional lenders are. He also suggested using a consistent valuation methodology for all collateral, and allowing creditors to choose between the options of liquidation or reorganization.
Promoting fairness among borrowers
It is essential that retail borrowers receive a fair solution during the Celsius bankruptcy process. Giving them the opportunity to repay their loans and recover their cryptocurrency as collateral would ensure greater transparency. All the more so as it strengthens trust in cryptocurrency lending platforms.
The court’s important role in this case
The court hearing the case has a crucial role to play in protecting the interests of retail borrowers. It is important to ensure that the proposed plan respects the original terms of the contract and does not favor certain players over others.
Promoting transparency and justice
The court must ensure that the bankruptcy plan in place guarantees full transparency and fairness for all borrowers, whether institutional or retail. Any changes to conditions and methodologies must be clearly communicated to all parties concerned. User trust is essential to the smooth operation of cryptocurrency lending platforms.
Conclusion
This situation highlights the difficulties faced by retail cryptocurrency borrowers in the face of lending platforms’ bankruptcy plans. It will be interesting to follow the development of this case.
