Bankrupt cryptocurrency platform Celsius has allocated $2 billion worth of crypto to thousands of creditors.
The distribution, facilitated through PayPal and Coinbase, forms part of Celsius Network’s ongoing strategy to address obligations to creditors.
Celsius Repays Creditors
In a recent court filing, Kirkland & Ellis — the Chicago-based law firm advising Celsius — shared an update on the creditor fund distributions outlined in the restructuring plan.
This development comes after Celsius announced its emergence from bankruptcy, a process initiated in July 2022.
Kirkland & Ellis disclosed that distributions of cryptocurrency to U.S. holders are conducted via PayPal, while Coinbase serves as the distribution agent for overseas holders.
See Also: BREAKING: Celsius To Start Paying Over $3B To Creditors
The legal team has confirmed the transfer of $2 billion worth of crypto assets to creditors, including 20,255.66 Bitcoin and 301,338.77 Ether.
The distribution of cryptocurrency to the majority of creditors rather than cash — as is usually the case in chapter 11 bankruptcies — “has hastened the speed of distributions,” the filing states.
The debtors “have successfully commenced a global distribution process to hundreds of thousands of creditors without encountering any significant operational or security issues,” the counsel explained.
Account holders who didn’t agree to the restructuring plan won’t receive any funds distribution until their claims are resolved.
It also highlighted that certain account holders might face challenges in receiving their distributions if Coinbase or PayPal detects any Anti-Money Laundering (AML) or compliance issues.
The filing further made it clear that distribution agents have the discretion to refuse to make distributions to anyone they believe does not fulfill their compliance and other requirements.
Celsius Files Chapter 11
On July 13, 2022, Celsius Network LLC — a cryptocurrency lending and borrowing platform managing around $25 billion in customer assets — filed for Chapter 11 bankruptcy.
The same day, the company’s founder and former CEO, Alex Mashinsky, was arrested and charged with multiple offenses, including securities, commodities, and wire fraud.
The charges accuse Mashinsky and a key executive, Roni Cohen-Pavon, of engaging in complex financial schemes, intentionally misrepresenting the company’s business model, and manipulating the value of Celsius’s proprietary crypto token, CEL.
Allegations further claim that Mashinsky misled the company’s customers, portraying it as a bank while operating it as a risky investment fund.
Additionally, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission filed separate civil charges against Mashinsky and Celsius based on similar grounds.
See Also: Ionic Digital Acquires Celsius Mining Assets, Targets Market Leadership Via Public Listing
As part of a settlement with the Federal Trade Commission (FTC), the company agreed to pay a $4.7 billion fine, contingent on creditor reimbursement.
This settlement ranks as one of the largest in the FTC’s history and highlights what the FTC describes as repeated deceptions by Celsius and Mashinsky.
While Mashinsky’s arrest and charges have provided some relief to creditors, some within the industry worry about the underlying attitudes that facilitated the platform’s rapid growth and subsequent collapse.
Mashinsky has pleaded not guilty to seven felony counts, including securities fraud, wire fraud and conspiracy to commit fraud.
He was released from custody on a $40 million bond. However, the case remains ongoing. Mashinsky, who resigned as CEO in September 2022, is expected to stand trial on Sept. 17.
On Jan. 5, Celsius revealed intentions to unstake its existing Ethereum (ETH) holdings, which have been yielding substantial staking rewards income for the estate.
The Ethereum that has been released is intended to address various expenses accrued during the restructuring process and accelerate distributions to creditors.
The bankruptcy of Celsius and the legal actions against Mashinsky reverberated throughout the cryptocurrency industry, emphasizing the importance of transparency, accountability, and regulatory compliance.
#Binance #WRITE2EARN
Disclaimer: The information provided is not trading advice, Bitcoinworld.co.in holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.