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January 4th, 2024
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Celsius Creditors to Return Funds Withdrawn Pre-Bankruptcy
Crypto News | Jan 10, 2024
Celsius Asks Creditors to Return Funds Withdrawn Within 90 Days Pre-Bankruptcy
Celsius, a cryptocurrency lending platform, is in the midst of a major financial restructuring following its bankruptcy declaration. The company is now requesting certain creditors who withdrew large sums in the months leading up to the bankruptcy to return a portion of their funds. This move is part of a broader effort to manage the company's financial crisis and ensure equitable treatment of all creditors.
See: CDPQ Posts $33.6 Billion Loss (H1 2022) After Writing Off US$150 Million in Celsius Network
- Celsius is focusing on account holders who withdrew over $100,000 in the 90 days before their bankruptcy declaration on July 13, 2022. These individuals are being asked to return 27.5% of their withdrawn amount.
- Those who fail to comply with the request may face legal action. The initiative aims to recover funds for equitable distribution among all creditors. Compliance with the fund return request makes creditors eligible for future distributions under Celsius's reorganization plan.
- Account holders who withdrew less than $100,000 are not required to return funds but must participate in the voting process regarding the reorganization plan.
- The company, along with its founder and CEO Alex Mashinsky, faces lawsuits from regulatory bodies like the SEC, FTC, and CFTC for allegedly misleading customers. Mashinsky is charged with fraud, and Celsius has agreed to a $4.7 billion settlement with the FTC.
Read: Bank of Canada Publishes Analytical Notes on DeFi
The outcome of this situation could set a precedent for how similar cases are handled in the future, impacting investor confidence and the stability of the cryptocurrency market.
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