Celsius Network has reached a settlement to avoid bankruptcy

Celsius Network has reached a settlement to avoid bankruptcy

The bankrupt crypto lender Celsius Network has reached two agreements that could allow it to return assets to its customers and stop the bankruptcy proceedings.


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According to court documents filed on July 20, , the bankrupt crypto lender Celsius Network has reached two settlements allowing it to return assets back to customers and to end its bankruptcy proceedings.

Judge Martin Glenn will analyze the settlements at an August 10 hearing and deal with $78.2 Billion in unsecure claims. Responses and objections must be filed with the court before August 3.

In one of the agreements, customers are able to recover 5% more by opting out of the settlement. If they choose to opt out of this settlement, account holders will still be able to bring individual claims against Celsius. According to court documents:

“Any eligible account holder who does not opt-out of the Settlement, will receive a payment in the amount of 105 percent of their scheduled claim. This will supersede any Proofs of Claim that such Account Holder has filed.”

The second settlement provides a solution for customers who have funds in Earn, Celsius’ interest bearing account. According to the proposed agreement customers who borrowed crypto-funds will be able receive a part of their funds as crypto assets and a compensation of shares in the new company that emerges from bankruptcy proceedings.

Screenshot – Notice of Hearing on Joint Motion for Approving Settlements. Source: Stretto.

The document states that “[…] creditor have agreed to support a revised Plan which will give holders of Retail Borrower deposit claims (a) an option to pay the principal balance of the loan […] for an equal amount of cryptocurrency, (which may lead to tax advantages for these Holders compared to Setoff Treatment), and (b) a priority to elect a preference in choosing a preference for exchange of the NewCo Equity in Liquid Cryptocurrency for a 30% discount

After announcing that it would halt all withdrawals due to the market turmoil caused by the Terra ecosystem’s collapse, Celsius filed Chapter 11 bankruptcy in July 2022. The company’s former CEO Alex Mashinsky was arrested on July 13th, 2023 under criminal and civil accusations of fraud and intent to manipulate the markets. He pleaded guilty to all the charges.

fined the lending platform $4.7 billion for “squandering” billions of user deposits after “duping” them.

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