Celsius seeks to recover funds withdrawn by creditors before bankruptcy
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Creditors who withdrew more than $100,000 in the three months before Celsius went bankrupt will have to return some of their funds or risk legal action, according to a recent creditor notice.
On January 9, the Celsius bankruptcy administrator announced a plan to notify creditors that people who withdrew more than $100,000 in the 90 days before declaring bankruptcy on July 13, 2022, may be obligated to return those funds.
this Archive Account holders who indicate withdrawals exceeding $100,000 and do not object to the reorganization plan and have not waived their rights may resolve their liability by repaying 27.5% of the withdrawn funds by January 31, 2024.
To participate in this settlement, account holders must submit their interest via the election form by January 25, 2024. Those who comply with the settlement agreement will be protected from further legal challenges and will benefit from distributions outlined in the reorganization plan.
Account holders who fail to complete settlement by the deadline will face proceedings from the administrator and may result in litigation to recover their funds.
Celsius declared bankruptcy on July 13, 2022 due to a $1.2 billion shortfall. In September 2023, creditors accepted the restructuring proposal, providing escrow account holders with 72.5% of their Bitcoin (BTC) and Ethereum (ETH) holdings. Interest-bearing account holders will receive cryptocurrency and shares in a new mining company made up of Celsius’ remaining assets.
In November, Celsius successfully exited bankruptcy proceedings and allowed qualified creditors to make withdrawals.
The company and its CEO, Alex Mashinsky, were sued by the SEC, FTC and CFTC for defrauding customers, with Mashinsky facing fraud charges. His trial is scheduled for fall 2024.
Celsius agreed to a $4.7 billion settlement with the Federal Trade Commission, to be paid out of bankruptcy.
Meanwhile, over the past week, Celsius transferred more than $90 million in uncollateralized ETH to its major creditors, Coinbase and FalconX.
The move is part of a broader strategic effort to liquidate the majority of its Ethereum holdings to enhance liquidity for restructuring costs and ensure timely payments to creditors.
