Celsius Bankruptcy: Customers Facing Possible Legal Action for Large Pre-Bankruptcy Withdrawals
Summary:
Celsius' creditors, who withdrew over $100,000 from the crypto lending platform before its bankruptcy, might have to return a part of their funds or face legal action. It's part of a reorganization plan outlined by the bankruptcy administrators. Those wishing to settle can pay 27.5% of the funds by January 2024. Failing to settle could result in legal proceedings. The company, moreover, announced a post-insolvency strategy emphasizing Bitcoin mining.
Clients of the insolvent cryptocurrency lending platform Celsius, who made excessive withdrawals prior to its insolvency declaration, might be compelled to repay some of those amounts or face legal consequences. On the 9th of January, administrators dealing with the Celsius insolvency informed its creditors that any individual who extracted more than $100,000 within the 90-day period before the insolvency announcement on July 13, 2022, might need to repay the amounts. The document stipulated that account owners who made withdrawals exceeding $100,000, aren't excluded parties, did not reject the reorganization scheme, and who didn't refuse releases, can resolve their liabilities by refunding 27.5% of the amounts by January 31, 2024. Account owners willing to settle must indicate their intention to make the repayment by submitting a form by January 25.
Proof of notice to Celsius account holders Case Number 22-10964. Source: Stretto
Account holders who choose to settle will be free from all avoidance actions and will get payouts as per the reorganization plan. Those failing to settle by the deadline will have their withdrawal claims examined by administrators and may face legal action to recover the preferences. Any unsettled claims after January 31, 2024, will be managed by the litigation administrator post the effective date. In late November, administrators allowed qualifying members to retrieve parts of their crypto holdings.
Related News: Celsius prepays $470 million in Ethereum ensuring timely repayments
Celsius has been actively executing withdrawals and unstaking of Ethereum to facilitate timely creditor payouts. As per Nansen, it now accounts for 20.3% of the withdrawal queue with 112,037 ETH, approximately worth $266 million. In November 2023, the company unveiled a downscaled post-insolvency strategy, focused on Bitcoin mining, ratified by presiding Judge at the end of December.
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Published At
1/10/2024 7:12:53 AM
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