Celsius Network reaches settlements to exit bankruptcy

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Bankrupt cryptocurrency lender Celsius Network has reached two settlements that allow it to return assets to customers and end bankruptcy proceedings. according to It will be submitted to the court on July 20.

The proposed settlement, which will be analyzed by Judge Martin Glenn at a hearing on Aug. 10, will address $78.2 billion in unsecured claims. Responses and objections must be submitted to the court by August 3rd.

One of the agreements will resolve fraud and misrepresentation claims by Celsius management by increasing customer recoveries by 5%. Account holders may retain the right to pursue individual claims against Celsius even if they opt out of the Settlement. According to court documents:

“Eligible account holders who do not opt ​​out of the Settlement will receive a claim in the amount of 105% of the amount of the scheduled claim, which supersedes and waives any related proof of claim submitted by such account holder.”

The second settlement provides a solution for customers with funds in Celsius’ interest-bearing Earn. Under the proposed agreement, customers who borrow cryptocurrency funds will be able to receive part of their funds in crypto assets, along with compensation in shares of the new company that has returned from bankruptcy.

”[…] Creditors have agreed to support an amended plan that provides holders of retail borrower deposit receivables with the option to (a) repay the principal balance of the loan; […] (b) a preferential right to elect to exchange NewCo shares for liquid cryptocurrency at a 30% discount in exchange for an equal amount of cryptocurrency (which may lead to tax benefits for such holders compared to offsetting); […]”, reading the document.

Celsius filed for Chapter 11 bankruptcy in July 2022 after announcing a moratorium on all withdrawals amid market turmoil caused by the collapse of the Terra ecosystem. A year later, on July 13, 2023, former CEO Alex Mashinsky was arrested on criminal and civil charges of fraud and intent to manipulate the market. He pleaded not guilty to all charges.

Also on July 13, the Securities and Exchange Commission filed a lawsuit against Mashinsky and other Celsius executives for raising “billions of dollars” through unregistered fraudulent offers and selling “crypto-asset securities.” The Federal Trade Commission also announced a civil lawsuit against the former CEO and fined the lending platform $4.7 billion for alleged “spending.”[ing] Billions of dollars in user deposits accrued after “tricking” users.

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