Daniel Leon, the co-founder of Celsius Network, has moved in court to declare the entirety of his equity stake in the embattled crypto company as “worthless.”
It has been reported that the law firm Kirkland & Ellis LLP filed a declaration on behalf of Leon, confirming his status as a substantial shareholder and declaring that his 32,600 common shares are now considered worthless.
However, a declaration that a particular stock or common share is “worthless” generally occurs when shareholders in a company think they will not receive any further distribution for their holdings.
According to the IRS, a stock is worthless when a taxpayer can show the security had value at the end of the year preceding the deduction year and that an identifiable event caused a loss in the deduction year. The embattled crypto lender filed for Chapter 11 bankruptcy in July, a month after halting withdrawals due to “extreme market conditions.”
Simon Dixon, the CEO of BnkToTheFuture, suggested in a Monday Twitter post that the declaration means that Celsius Network private equity shares are now “officially worthless” and that the co-founder wants to use them as a tax write-off. Celsius raised two rounds of private equity funds from smaller investors via BnkToTheFuture.
The report said that Celsius Network’s cash runway appears to have stretched. While a filing last month forecasted the company to be out of money by October, a new forecast appears to show the company has managed to get more breathing room.
Thus, the latest forecast, dated August 31 and filed to the United States Bankruptcy Court on Tuesday has the firm sitting on just over $111 million in cash currently, forecasting $42 million cash left by the end of November.
Source: Cointelegraph