Crypto-Reddit mobilizes after being hit by bankruptcies

A few months ago, the nearly 47,000,000,000-strong Reddit group of Celsius Network LLC was filled with talk about how much everyone earns by borrowing their coins through the platform. After the company filed for bankruptcy, members began using the forum, among other things, to fight for the return of their funds.

Reddit, Telegram and Twitter have helped fuel the meme craze, and now users on the sites are channeling the same energy into campaigning in court in several crypto bankruptcy cases, including Celsius and Voyager Digital Ltd. They're tapping into the huge social media communities that already exist for both platforms, urging users to write letters to the judge overseeing the Celsius case, pooling funds for legal representation. and sharing news and tips.

Celsius Custody Accts has amassed more than 950 members on Telegram since promoting on Reddit. Several dozen users raised $1,500 or more to join the group's committee, which represents Togut, Segal & Segal LLP, according to Telegram posts and one of the group's organizers, David Little. Others contributed just a few dollars. 

"It was pretty neat — some of these guys were saying, 'I'm skipping lunch today and instead putting $15 into GoFundMe,'" said Little of Texas, who declined to say how much he had in his Celsius account. It was kind of crazy for a group of strangers who had just gone through this huge process of losing their savings to say, "Let's unite." Without this approach to crowdfunding, we would not have been able to get legal representation." 

The group's goFundMe campaign to date has raised $3,275, mostly from small donors.

Getting the group together was pretty easy, as Celsius had already put a lot of effort into educating his community. Chief Executive Officer Alex Mashinsky often hosted Twitter Spaces and weekly ask-me-anything sessions on YouTube. 

Another special group announced Thursday, representing Celsius Withhold account holders, is also recruiting staff on Reddit, posting, "Guys, we need to make sure the court focuses on Withhold accounts as soon as possible!"

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"If you band together, it will suddenly be possible to hire a good bankruptcy attorney and have a voice at the table," said Deborah Kowski-Apap, an attorney at Troutman Pepper Hamilton Sanders LLP, representing the group. According to her, about a dozen US states have not allowed the creation of depository accounts, so customers in these states have opened Withhold accounts, which should also be entitled to 100% refund of their funds.

There's also a Telegram group called "$5,000 Voyager Victims" for clients who have invested more than $5,000 in Voyager. He currently has 175 followers and is promoting more members on Reddit. The idea is to share updates and "talk about possible lawsuits or anything else we can do to speed up the return of our funds," one Reddit user said.

Meanwhile, Thomas Braziel, managing partner at investment firm 507 Capital, which has been buying up lenders' claims in previous crypto bankruptcies, said he already participates in five Telegram groups organized only by Celsius lenders. He also said he has been involved in more than 10 Twitter spaces related to recent crypto bankruptcies, helping small claim holders understand the procedures. 

"We'd like to buy bigger claims — $1 million and up — but that's not why I'm there with the claimants," Braziel said in an interview, adding that he receives 10 to 20 direct messages on Twitter every day asking for help with bankruptcy issues. "I love crypto people coming to bankruptcy country. They're smart people." 

According to Braziel, more special groups of investors are formed for the various lenders in Celsius. Most of them are also on Telegram and Reddit.