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Celsius Network Settles Lawsuits, Exits Bankruptcy

Celsius Network’s Path to Resolving Bankruptcy

Celsius Network, a cryptocurrency lending platform that confronted insolvency, has successfully concluded two agreements opening the door for potential asset returns to clients and the resolution of its bankruptcy proceedings.

Celsius logo behind a cryptocurrency chain

The renowned cryptocurrency company, mainly catering to retail investors, declared bankruptcy last year, causing uncertainty among numerous clients.

In response to allegations of fraud and misrepresentation by Celsius’s former management, a settlement has been reached, offering an improved recovery of 5% to affected parties. This settlement addresses 30,000 claims, totaling $78 billion in compensation, with all responses and objections required to be filed by August 3.

“Any eligible Account Holder who does not opt out of the Settlement will receive a claim in the amount of 105% of their scheduled claim, superseding and extinguishing any related Proofs of Claim filed by such Account Holder.“

Another significant agreement resolves the dispute between two major customer groups of the cryptocurrency firm: those with deposits in high-interest accounts and others who had obtained fiat-currency loans.

Borrowers requested special consideration compared to high-interest account holders and secured specific concessions through the settlement, allowing them to reclaim their collateralized crypto upon full loan repayment.

Notice of hearing filled agains Celsius

“[…] Creditors have agreed to support an amended Plan that will provide Holders of Retail Borrower Deposit Claims with (a) the option to repay the principal balance of their loan […] in exchange for an equivalent amount of cryptocurrency (which could lead to tax benefits for such Holders as compared to the Setoff Treatment) and (b) priority in electing a preference to exchange the NewCo Equity for Liquid Cryptocurrency at a 30% discount […],” reads the document.

On July 14, 2023, Celsius initiated financial restructuring measures and filed for Chapter 11 protection.

Initially, Celsius’s legal team expected that clients would solely recover their deposits. However, certain users pursued claims for damages, alleging misconduct by the former management. The situation became even more complex with the arrest of Celsius founder, Alex Mashinsky, on charges related to customer fraud.

Read our article on that here.

During Mashinsky’s tenure, Celsius came under investigation by the CFTC, revealing instances of investor deception and violations of U.S. regulations. Furthermore, in January, the New York Attorney General filed a lawsuit against Mashinsky.

After enduring a prolonged wait of over a year, Celsius users now have a glimmer of hope with recent settlements. However, it is crucial to bear in mind that these settlements are still subject to court approval.

Hopefully, anyone who was caught up in this can finally recover their funds!

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