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0 CommentsBankrupted crypto lender Celsius Network reached two settlements that may allow the return of assets to customers and end its bankruptcy proceedings.
Bankrupted crypto lender Celsius Network reached two settlements that allows it to return assets to customers and end its bankruptcy proceedings, according to court filings on July 20.
The settlements will be analyzed by Judge Martin Glenn at a hearing on August 10 and address $78.2 billion in unsecured claims. Any responses and objections should be submitted to the court by August 3.
One of the agreements resolves claims over accusations of fraud and misrepresentation by Celsius management by increasing customers’ recoveries by 5%. Account holders can still retain rights to pursue individual claims against Celsius if they opt out of the settlement. As per the court documents:
“Any eligible Account Holder who does not opt out of the Settlement will receive a claim in the amount of 105% of their scheduled claim, which will supersede and extinguish any related Proofs of Claim filed by such Account Holder.”
The second settlement offers a resolution for customers with funds in Celsius’ interest-bearing Earn. Under the proposed agreement, customers who borrowed crypto funds will be able to receive a portion of their funds in crypto assets, along with a compensation in shares of the new company emerging from the bankruptcy proceedings.
“[…] creditors have agreed to support an amended Plan that will provide Holders of Retail Borrower Deposit Claims with (a) the option to repay the their principal balance of their loan […] in exchange for an equivalent amount of cryptocurrency (which could lead to tax benefits for such Holders as compared to the Setoff Treatment) and (b) priority in electing a preference to exchange the NewCo Equity for Liquid Cryptocurrency at a 30% discount […],” reads the document.
Celsius filed for Chapter 11 bankruptcy on July, 2022 after announcing a pause in all withdrawals amidst market turbulence stemming from the collapse of the Terra ecosystem. A year later on July 13, 2023, its former CEO, Alex Mashinsky, was arrested under criminal and civil charges of fraud and intention to manipulate the market. He pleaded not guilty to all charges.
Also on July 13, the Securities and Exchange Commission filed a lawsuit against Mashinsky and other Celsius executives for raising “billions of dollars” through unregistered and fraudulent offers, as well as selling “crypto asset securities.” The Federal Trade Commission also announced civil cases against the former CEO and issued $4.7 billion in fines to the lending platform for allegedly “squander[ing] billions in user deposits” after “duping” users.
Source: https://cointelegraph.com/news/celsius-network-reaches-settlements-exit-bankruptcy
