Celsius Announces $127 Million Second Bankruptcy Payout
Crypto Lender Takes a Second Step Toward Creditor Recovery
Celsius, the beleaguered cryptocurrency lender that filed for bankruptcy in 2022, has unveiled plans for a second creditor payout totaling $127 million. This latest distribution, allocated from the company’s Litigation Recovery Account, represents a significant milestone in Celsius’s complex bankruptcy proceedings.
Creditors eligible under Classes 2, 5, 7, 8, and 9 will receive their payments in cash or cryptocurrency, depending on eligibility and claim details. Bitcoin will be valued at an extraordinary $95,836 per unit for the purposes of this payout, underscoring the atypical valuation dynamics of bankruptcy resolutions in the crypto space.
The $127 million disbursement will cover approximately 60% of creditor claims and follows an earlier payout of $2 billion in cryptocurrency to over 171,000 creditors. The decision aligns with Celsius’s ongoing efforts to manage its financial collapse, which was precipitated by a $1.2 billion gap in its balance sheet. The company’s bankruptcy plan has been under intense regulatory and public scrutiny since the filing, reflecting the broader challenges faced by crypto lenders during a volatile market period.
Legal Troubles Deepen for Celsius’s Ex-CEO
Adding to Celsius’s financial woes, former CEO Alex Mashinsky is entangled in legal battles stemming from allegations of fraud and customer deception. Mashinsky is accused of providing false assurances about the safety of investments and the performance of the company’s crypto lending products.
Regulatory authorities, including the SEC and FTC, have pursued charges, with a class-action lawsuit amplifying the stakes. Earlier this year, Mashinsky’s attempt to dismiss fraud charges was denied, leaving him exposed to a potential 115-year prison sentence if convicted.
These legal issues have further complicated Celsius’s bankruptcy proceedings. The accusations against Mashinsky paint a grim picture of internal mismanagement, casting doubt over the company’s ability to restore confidence among creditors. Legal analysts are closely observing the case, noting its potential to shape future regulatory frameworks for crypto lending platforms.
Broader Implications for Crypto Lending Platforms
Celsius’s bankruptcy saga is not an isolated incident. Similar challenges have plagued other crypto firms, such as South Korea’s Haru Invest, which collapsed following the exposure of a $1 billion fraud. Haru’s executives, including CEO Hugo Hyungsoo Lee, face criminal charges after the platform’s abrupt withdrawal freeze in mid-2023 left 16,000 investors in financial limbo. The company’s liquidation process highlights the ongoing risks and lack of safeguards in the burgeoning crypto lending industry.
These developments underscore the growing need for transparency and accountability within the sector, as firms navigate complex regulatory landscapes while grappling with financial insolvencies. The unfolding drama of Celsius, coupled with high-profile failures like Haru Invest, signals a critical juncture for the crypto industry as it seeks to regain investor trust amid mounting scrutiny.
This article has been refined and enhanced by ChatGPT.
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