Celsius Corporate Account Holders Demand Additional Payout from Bankruptcy Estate
Summary:
A married couple, known as the Faller Creditors, who held accounts with digital money lender Celsius, have filed a motion to secure a second payout from the firm's bankruptcy, claiming they received a 35% reduced payout compared to individual accounts. The Faller Creditors, alongside others, accuse Celsius of delaying the payments and paying in cash instead of cryptocurrency. Before the bankruptcy announcement, their accounts held over $1 million worth of cryptocurrency. After a delay and negotiations, the Fallers have allegedly received a total of $634,335 but claim the market value at the time of receipt should've been $973,955. They are, therefore, demanding an additional payment of $338,611 along with interest payments of about $11,984 for withholding their payout beyond the scheduled date, leading to a total of $350,596.
A wedded pair known as the Faller Creditors, who held corporate accounts with the digital money lender platform, Celsius, have instituted a legal intervention to secure a supplementary payout from the firm's bankruptcy. They, alongside other creditors, claim they received a 35% cut to their payout compared to individual accounts. This legal maneuver was advanced on June 3, and a court will convene to examine it on June 27.
The action follows a series of grievances from corporate creditors accusing Celsius of stalling payments to corporate accounts and delivering cash instead of cryptocurrency, to the detriment of those creditors. As detailed in the official documents, four companies by the names of BFaller RD, BFaller ROTH RD, SFaller TRD RD and SFaller RD, the "Faller Creditors", are appealing for a mandate approving increased distribution under the bankruptcy strategy laid out by Celsius. These companies are Individual Retirement Accounts (IRAs) belonging to Sheri Anne Faller and Bernard Jacob Faller, California's business registry records revealed.
According to the documentation, prior to the bankruptcy announcement, these four IRAs reportedly had over $1 million in cryptocurrency in Celsius accounts. The bankruptcy plan negotiated resulted in a reduced claim of $634,337.93 worth of Bitcoin (BTC) and Ether (ETH), scheduled for disbursement on Jan. 16. This amount represented an obligation of approximately 7.38 BTC and 123 ETH to the pair.
However, the payment dated for Jan. 16 allegedly never happened per the duo's claims, whose cryptocurrency payments were barred by a Celsius representative on Jan 19, as their accounts were not among the top 100 in asset value. The cryptocurrency would have to be exchanged for fiat and disbursed through traditional banking channels.
At first, the couple conceded to receiving the fiat equivalent of their cryptocurrency holdings on Jan. 19. Despite agreeing, they assert that payment was not made. They requested payment in cryptocurrency on Feb. 13 due to the delay, only to be reminded that they couldn't receive such due to an arbitrary ranking of corporate creditors.
Eventually, they received a wire transfer totaling $414,733 on Feb. 22, but claim they were not allowed to withdraw these funds until March 8. Following this, they received additional payments on April 22, amounting approximately to $219,602, resulting in a total of $634,335. The couple asserts that the fiat value of the payouts was significantly lesser than the initial value of the promised BTC and ETH, based on the market situation when they received the payments. Based on their calculations, they propose they should have received $973,955, equivalent to the original promise. Hence, they demand an additional payment of $338,611 along with interest payments of about $11,984 for withholding their payout beyond the scheduled date, leading to a total of $350,596.
Faller Creditors are not an isolated case, as multiple businesses reported experiencing unequal treatment compared to high-ranking corporate accounts or individual clients. In response to similar allegations, Celsius Estate argues it had already liquidated the user’s cryptocurrency assets on the scheduled date of Jan. 16 and was unable to distribute assets already sold. It added that due to formidable compliance and onboarding procedures, most corporate creditors remained unaccounted for.
The latest filing refutes this defense by arguing that the estate failed to go to reasonable lengths to facilitate corporate creditors with accounts, due to the limited selection of PayPal and Coinbase as distribution agents. They suggest cryptocurrency exchanges Kraken and Bitgo as viable alternatives.
A leading figure in the fight against this claimed shortchange, Celsius corporate creditor Wesley Chang, pointed out that an omnibus hearing is set for June 27 at 10 am EDT, where the motion will go under review.
Celsius, a cryptocurrency lending agency established in 2017, halted withdrawals in June 2022, leaving an estimated $2.8 billion worth of customers' digital assets inaccessible on its platform. Its founder and ex-CEO, Alex Mashinsky, has been charged with seven counts of fraud correlated with the company’s demise. His trial is due for September.
Since filing for bankruptcy in July 2022, Celsius has managed to settle over $2 billion worth of creditor claims. According to a Feb. 15 court document from the platform's estate, most creditors have received their cryptocurrency payouts "without any security or operational issues.
Published At
6/25/2024 4:22:25 PM
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