Celsius Distributes $2.5 Billion, 121,000 Creditors Still Await Funds
In a significant update from its bankruptcy proceedings, Celsius Network has repaid approximately $2.53 billion to over 251,000 creditors. This payment, which constitutes around 84% of the total $3 billion owed to more than 375,000 creditors, marks a substantial step forward in the crypto lender’s restructuring process. As reported in a recent court filing, the repayments cover two-thirds of the eligible creditors by number and about 93% by value.
Distribution Details
The disbursements, which commenced in January 2024, were made in liquid cryptocurrency and cash based on prices as of January 16. However, a notable number of creditors—approximately 121,000—have yet to claim their funds. Around 64,000 creditors are owed less than $100 each, and 41,000 are entitled to between $100 and $1,000. The court filing highlights that many of these smaller creditors might not be motivated to complete the necessary steps to claim their distributions.
“The amounts at issue for many of these creditors are so small that they may not be incentivised to take the steps needed to claim their distribution,” the filing noted.
Challenges in the Distribution Process
The distribution process has been fraught with complexities. The bankruptcy plan, approved in November 2023, is described as one of the most ambitious ever attempted in a Chapter 11 case. It involves distributing assets to creditors across more than 165 countries, and the complexity has been exacerbated by regulatory challenges and enforcement actions.
Further complicating the process, some creditors have faced difficulties with KYC/AML checks or have failed to redeem claim codes sent via PayPal or Coinbase. Despite these hurdles, the administrator has attempted over 2.7 million distributions in total.
Legal and Financial Context
Celsius filed for bankruptcy in July 2022 following a suspension of user withdrawals. The company, which once managed $25 billion in assets, was beset by a severe drop in the value of its native token and subsequent legal issues. The bankruptcy has involved multiple settlements with US regulatory bodies and ongoing legal disputes. Former CEO Alex Mashinsky faces federal charges related to financial fraud, though he maintains his innocence.
In recent developments, Celsius has also filed a lawsuit against stablecoin firm Tether, alleging improper liquidation of $2.4 billion worth of Bitcoin before its bankruptcy. Tether has dismissed the claim as a “shakedown.”
Conclusion
While Celsius’s repayment plan represents a significant milestone in its bankruptcy proceedings, challenges remain, particularly for smaller creditors and the overall complexity of the distribution process. The ongoing legal disputes and regulatory scrutiny continue to shape the company’s path forward.
