White & Case secures landmark victory for Celsius Litigation Administrator on damages issues in cryptocurrency avoidance actions

Global law firm White & Case LLP has secured a landmark victory for the Litigation Administrator of Celsius Network LLC regarding the measure of available damages in connection with Celsius's cryptocurrency avoidance actions in what the bankruptcy court recognized as a matter of first impression in the fast-developing area of cryptocurrency law.

The decision, by Chief Judge Glenn of the United States Bankruptcy Court for the Southern District of New York, covered several novel legal issues regarding damages in cryptocurrency avoidance actions. Chief Judge Glenn held that, for depreciating digital assets, the Litigation Administrator may recover the transfer-date value of the asset, regardless of whether a defendant remains in possession of the asset. Chief Judge Glenn further held that, for appreciating digital assets, the Litigation Administrator may recover the asset itself if it remains in the defendant's possession or, if the asset has been sold, the sale price.

The court further held that defendants bear the burden of demonstrating that an asset was sold and the price at which it was sold. If a defendant cannot satisfy that burden, the Litigation Administrator may recover the judgment-date value of the asset. The court also held that, if a defendant is no longer in possession of an appreciating asset for any reason other than a sale, the Litigation Administrator may recover the judgment-date value of the asset.

Chief Judge Glenn's decision paves the way for the Litigation Administrator to obtain meaningful recoveries from the nearly 1,000 remaining defendants who transferred cryptocurrency assets off Celsius's platform in the months leading up to Celsius's bankruptcy. The decision will likely also have precedential and far-reaching effects in many other cryptocurrency cases.

White & Case represents the Litigation Administrator in the Celsius chapter 11 cases and related avoidance litigation.

The White & Case team was led by Financial Restructuring and Insolvency partners Samuel Hershey (New York), who delivered oral argument, Gregory Pesce, Laura Baccash (both in Chicago) and Ronald Gorsich (Los Angeles), and included Financial Restructuring and Insolvency associates Devin Rivero (Miami) and Alice Hong (New York); and Litigation associate Cheyenne Kleinberg (New York).

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