Celsius Returns $2.5 Billion to 251,000 Creditors Amid Bankruptcy Proceedings

Bankrupt Crypto Lender's Repayments

As part of its ongoing bankruptcy proceedings, Celsius has managed to reimburse two-thirds of its eligible customers. A court filing from August 26 reveals that the bankrupt cryptocurrency lender has returned around $2.53 billion to 251,000 creditors. This sum equates to approximately 84% of the $3 billion in assets that the defunct crypto lender owes to its 375,000 creditors.

Positive Development for the Crypto Industry

The repayments made during the bankruptcy proceedings are seen as a positive turn of events for the growing cryptocurrency industry. This development coincides with the bankruptcy proceedings of the Mt. Gox exchange, which owes more than $9.4 billion in cryptocurrency to 127,000 creditors. After a decade, these creditors are finally starting to recover their assets.

Some Creditors Yet to Claim Their Cryptocurrency

However, not all creditors are actively seeking to claim their cryptocurrency due to the small amounts they are owed. The filing reveals that of the remaining 121,000 creditors who have yet to claim their funds, approximately 64,000 are owed less than $100 in crypto, while 41,000 creditors are owed between $100 to $1,000. The document states: “Given the small amounts at issue for many of these creditors, they may not be incentivized to take the steps needed to successfully claim a distribution.”

Attempts to Distribute Funds to Creditors

The bankruptcy administrator will attempt to distribute funds to these creditors via Coinbase every two weeks. Meanwhile, PayPal claim codes can be redeemed for credits at any time. The administrator has reportedly “attempted more than 2.7 million distributions in total for the approximately 372,000 currently eligible creditors.”

Celsius's Bankruptcy and Legal Troubles

Celsius filed for bankruptcy in July 2022, a month after it suspended user withdrawals. The company stated that the suspension was necessary to put it in a “better position to honor, over time, its withdrawal obligations” after the price of its native token, Celsius (CEL), plummeted in 2022. The bankruptcy led to Celsius settling $4.7 billion in fines with the United States Federal Trade Commission, along with settlements with the Department of Justice, the Securities and Exchange Commission, and the Commodity Futures Trading Commission. Alex Mashinsky, its former CEO, was arrested and charged by federal prosecutors with various financial frauds, including manipulating CEL’s price and misleading Celsius customers. Mashinsky has pleaded not guilty and is out on a $40 million bond pending trial in September.

Bottom Line

While the bankruptcy proceedings of Celsius are a significant development in the crypto industry, it's important to note the challenges and risks involved. The case highlights the need for users to be cautious when investing in cryptocurrencies. It also raises questions about the effectiveness of regulatory oversight in the rapidly evolving crypto market. What are your thoughts on this matter? Feel free to share this article with your friends and engage in a discussion. Remember, you can sign up for the Daily Briefing, which is delivered every day at 6pm.