Celsius Pays Out $2.5 Billion to Creditors in Bankruptcy Proceedings
In a significant development for the crypto world, Celsius Network has begun distributing funds to its creditors as part of its long-awaited bankruptcy proceedings. As of August 26, court documents reveal that Celsius has repaid approximately $2.53 billion to 251,000 creditors. This payout represents about 84% of the $3 billion the bankrupt crypto lender owed to over 375,000 creditors.
This repayment marks a crucial step forward for the broader cryptocurrency industry, signaling progress in the resolution of major financial disputes. It coincides with the ongoing bankruptcy proceedings of the Mt. Gox exchange, which owes over $9.4 billion to 127,000 creditors. After a decade of waiting, Mt. Gox creditors are finally beginning to see some of their assets returned.
Many Creditors Still Awaiting Their Funds
Despite the substantial progress, not all creditors have claimed their funds. According to the Celsius bankruptcy administrator, approximately 121,000 creditors have yet to make a claim. The breakdown reveals that about 64,000 of these creditors are owed less than $100, while 41,000 are due between $100 and $1,000.
The administrator notes that many creditors might be disincentivized to claim their distributions due to the relatively small amounts involved. To address this, Celsius will attempt to redistribute funds every two weeks via Coinbase, while PayPal claim codes remain redeemable at any time.
In total, the administrator has attempted over 2.7 million distributions for the roughly 372,000 eligible creditors, highlighting the scale and complexity of the payout process.
A Closer Look at the Celsius Bankruptcy
Celsius filed for bankruptcy in July 2022, just one month after halting user withdrawals. The company stated that this pause was necessary to position itself better to fulfill its withdrawal obligations after a sharp decline in the value of its native token, Celsius (CEL), in 2022.
The bankruptcy proceedings have been tumultuous, with Celsius settling $4.7 billion in fines with various U.S. regulatory bodies, including the Federal Trade Commission, the Department of Justice, the Securities and Exchange Commission, and the Commodity Futures Trading Commission.
Adding to the drama, former CEO Alex Mashinsky was arrested and charged with multiple counts of financial fraud, including manipulating CEL’s price and misleading Celsius customers. Mashinsky, who has pleaded not guilty, is currently out on a $40 million bond, with his trial scheduled for September.
Looking Ahead
As the Celsius bankruptcy unfolds, the industry watches closely. The return of funds to creditors is a positive sign, but the ongoing legal battles and regulatory scrutiny continue to cast a shadow over the resolution process. The journey from financial turmoil to recovery remains a complex and closely monitored aspect of the crypto sector’s evolving landscape.
