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Fresh Start: Macco's Bonjour on Crypto Chapter 11s

By Stephanie Gleason
Published: November 14th, 2022
Pablo Bonjour, former financial adviser to Cred, discusses lessons learned from the case as well as the Voyager and Celsius bankruptcies.

Pablo Bonjour of Macco Restructuring Group LLC on the latest episode of Fresh Start discussed what we’ve learned so far from the Chapter 11 cases of cryptocurrency companies Cred Inc., Voyager Digital Holdings Inc. and Celsius Network LLC.

The conversation was recorded before the sudden collapse and Chapter 11 filing of cryptocurrency exchange FTX Trading Ltd., but Bonjour’s insights and takeaways, as the financial adviser for Cred, are only more relevant now.

“The crux of the issue with Cred,” he said, “is actually the same business model that other cryptocurrency exchanges and companies are encountering today with more Chapter 11s.

“Until they change this model, you’ll probably continue to see more Chapter 11s,” he added.

Cred’s Chapter 11 filing in November 2020 preceded those of Voyager and Celsius earlier this year — and now FTX.

Bonjour discussed the ways any volatility in the notoriously volatile cryptocurrency market can quickly send companies in the sector into Chapter 11. He also gave a rundown of the situations that caused each of the companies to seek Chapter 11 protection and discussed what is happening to creditors and the benefits of having had an examiner in the Cred case — adding that he supports the decision to have an examiner in the Celsius proceedings.

Finally, in light of the situation faced by customers of all of these companies, who cannot gain access to their funds and aren’t likely to fully recover them, Bonjour made the following recommendation: “It’s important to read the customer agreements, it’s important to understand what the business model is, and what I always recommend — if you’re going to invest for the long term — you take your cryptocurrency and use a cold storage device to upload it directly to the blockchain yourself and you control your own cryptocurrency. Then, if you want to get some interest, you want to stake some, you can, but just do it with a smaller portion of your portfolio.”

Listen to the podcast with Pablo Bonjour below. Also worth another listen is the first Fresh Start episode on cryptocurrency and Chapter 11 with Georgetown University’s Adam Levitin.

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