Bankrupt cryptocurrency platform Celsius has allocated $2 billion worth of cryptocurrencies to thousands of creditors.
The distribution, facilitated through PayPal and Coinbase, forms part of Celsius Network's ongoing strategy to address its obligations to creditors.
Celsius repays creditors
In a recent court filing, Chicago-based law firm Kirkland & Ellis, which advises Celsius, shared an update on the distribution of creditor funds outlined in the reorganization plan. This development comes after Celsius announced its exit from bankruptcy proceedings, which began in July 2022.
Kirkland & Ellis revealed that the distribution of cryptocurrencies to U.S. holders will be done through PayPal, with Coinbase acting as the distribution agent to overseas holders. The legal team confirmed that $2 billion worth of crypto assets, including 20,255.66 Bitcoin and 301,338.77 Ether, were transferred to creditors.
As is often the case in Chapter 11 bankruptcies, distributing virtual currency to the majority of creditors rather than cash “accelerated the speed of distribution,” the filing states.
The debtor “successfully initiated a global distribution process to hundreds of thousands of creditors without encountering any significant operational or security issues.”
There is a problem,” the lawyer explained.
Account holders who do not consent to the reorganization plan will not receive any distribution of funds until their claims are resolved.
It also emphasized that certain account holders may face difficulty receiving distributions if Coinbase or PayPal detect anti-money laundering (AML) or compliance issues.
The filing also states that distributors have the discretion to refuse distribution to anyone they believe does not meet compliance or other requirements.
Celsius File Chapter 11
On July 13, 2022, Celsius Network LLC, a virtual currency lending and borrowing platform that manages approximately $25 billion in customer assets, filed for Chapter 11 bankruptcy.
On the same day, the company's founder and former CEO Alex Mashinsky was arrested and charged with multiple crimes, including securities, commodity and wire fraud.
The charges allege that Mashinsky and key executive Roni Cohen Pavon engaged in a complex financial scheme that intentionally misrepresented the company's business model and manipulated the value of Celsius' proprietary cryptographic token, CEL. has been accused of.
The allegations further allege that Mr. Mashinsky misled customers by misrepresenting the company as a bank and operating it as a high-risk investment fund.
Additionally, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission filed separate civil complaints against Mr. Mashinsky and Mr. Celsius on similar grounds.
As part of its settlement with the Federal Trade Commission (FTC), the company agreed to pay a $4.7 billion fine in exchange for repaying creditors. The settlement is one of the largest in FTC history and highlights what the FTC describes as repeated deceptions by Mr. Celsius and Mr. Mashinsky.
While Mashinsky's arrest and indictment provided some relief to creditors, some within the industry remain concerned about the underlying attitudes that fueled the platform's rapid growth and subsequent collapse. There is.
Mashinsky has pleaded not guilty to seven felonies, including securities fraud, wire fraud and conspiracy to commit fraud.
He was released from custody after posting $40 million bail. However, the case is still ongoing. Mashinsky will step down as CEO in September 2022 and is scheduled to go to trial on September 17th.
On January 5th, Celsius announced its intention to de-stake its existing Ethereum (ETH) holdings, which are generating significant staking reward income for the property.
The released Ethereum is intended to address various costs incurred during the restructuring process and accelerate distribution to creditors.
The bankruptcy of Celsius and the lawsuit against Mashinsky have reverberated throughout the crypto industry, highlighting the importance of transparency, accountability, and regulatory compliance.
