Bankrupt Crypto Lender Celsius Seeks Return of $2B from Clients; Former CEO Indicted
Summary:
Post-bankruptcy, crypto lender Celsius is attempting to recover $2 billion from primary clients who withdrew funds just before the company collapsed. The goal is to use these funds to compensate customers who failed to withdraw their investments in time. The company, which cleared bankruptcy, has started redistributing over $3 billion in crypto and fiat currencies to its users. Former CEO, Alex Mashinsky, was indicted on several felony charges, and currently remains free on $40 million bail.
In the aftermath of its bankruptcy in July 2022, the embattled crypto lender Celsius is looking to recover $2 billion from primary clients who initiated withdrawals just before the financial calamity hit. As noted in a March 20 report by Bloomberg, a committee supervising Celsius' bankruptcy has started reaching out to clients whose withdrawals exceeded $100,000 prior to its downfall. The intention is to use any recouped funds to reimburse those customers who could not pull their investments out in time. Trustees estimate that this recovery effort will impact 2% of the crypto lender's clientele who collectively pulled out 40% of the company's assets at the very last moment before the bankruptcy was filed. This group of customers will be presented with an advantageous settlement rate and threatened with potential legal action should they resist returning the funds. Those who agree to settle will have their virtual assets readjusted based on their value in July 2022, during the most severe crypto bear market downturn. This arrangement will allow them to retain any capital gains that accrued following the market's recovery. On January 31, Celsius emerged from bankruptcy and initiated the tasks of redistributing over $3 billion in both crypto and fiat currencies to their users. The distribution plan was approved by a whopping 98% of creditors. Nevertheless, a number of business creditors have since argued that being paid in fiat money would diminish their claims by 30% compared to receiving payouts in crypto. The company managed to clear $4.7 billion in penalties imposed by the US Federal Trade Commission, even settling matters with the Department of Justice, the Securities and Exchange Commission and the Commodity Futures Trading Commission. In September 2022, Celsius CEO, Alex Mashinsky resigned, subsequently being indicted in July 2023 on seven felony accusations, from securities fraud to wire fraud and conspiracy to commit fraud related to his role at Celsius. He remains free, having posted bail set at $40 million as at the time of this news.
Published At
3/20/2024 7:55:55 PM
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