Celsius reaches settlement that will enable users to receive assets by year-end News ▸ Celsius ▸ Bankruptcy
Celsius reaches settlement that will enable users to receive assets by year-end
Celsius' settlements, which require court approval, resolve 30,000 customer claims seeking $78 billion in compensation.
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Updated: Jul. 22, 2023 at 2:38 pm UTC
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Celsius has reached settlements that will allow it to return user assets by the end of 2023, the Wall Street Journal reported. Celsius’ reorganization plan involves returning only part of the crypto users deposited on the platform.
Celsius will compensate users with shares in a new company to compensate for the remaining. Celsius will emerge as a new entity under the management of a cohort of investors led by Michael Arrington, co-founder of technology-focused news publication TechCrunch. The new firm will handle Celsius’ illiquid assets and its mining business.
One prong of Celsius’ settlements addresses customer allegations of fraud and misrepresentations by Celsius executives. Several Celsius users filed claims seeking damages for alleged misconduct by the lender’s former management, according to court documents filed on July 20.
The settlement terms have increased user recoveries by 5%, resolving 30,000 claims seeking compensation of $78 billion, court documents indicate.
The settlements also resolve the dispute between Celsius’ high-interest account depositors and fiat-currency loan borrowers. Those who borrowed fiat currency on the Celsius Network platform will get back the crypto they put up as collateral once they repay their loans, per the settlement terms.
Celsius users have been waiting for over a year
Celsius Network was one of the largest crypto lenders when it filed for bankruptcy on July 13 last year. At the time, Celsius owed its users $4.7 billion worth of crypto and had a $1.2 billion deficit on its balance sheet.
Last week, Celsius founder Alex Mashinsky was arrested for allegedly defrauding users. The U.S. Securities and Exchange Commission (SEC) levied fraud charges against Mashinsky and Celsius earlier this month.
In early July, the Commodity Futures Trading Commission (CFTC) found in an investigation that Celsius, under the leadership of Mashinsky, misled investors and violated U.S. regulations. The New York Attorney General also sued Mashinsky in January.
While the recent settlements bring hope to Celsius customers waiting for over a year, the settlements still require court approval. The lender will seek approval at an August 10 hearing, as per the WSJ report.
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Monika Ghosh
In 2020, Monika immersed herself in crypto, maintaining skepticism yet firmly believing blockchain could address key issues like financial disparity and transparency. A book-lover, she's also a passionate food enthusiast.
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Celsius Network is a P2P decentralized lending & borrowing platform.
Celsius Network
Celsius Network is a bankrupt cryptocurrency lending company that was founded in 2017 and headquartered in Hoboken, New Jersey.
Alex Mashinsky, born in 1965 in the Soviet Union to a Jewish family, moved to Israel in the 1970s.