Crypto lending platform Celsius has commenced withdrawals for a specific group of users. This move comes at a crucial juncture for the company and its clients as it grapples with financial instability and legal challenges.
As outlined in a filing with the United States Bankruptcy Court for the Southern District of New York, participants falling under “Class 6A General Custody Claims” and “Class 6B Withdrawable Custody Claims” are now eligible for fund withdrawals. The deadline for these withdrawals has been set for Feb. 28, 2024.
Eligible participants are permitted to withdraw 72.5% of their cryptocurrency holdings, with transaction fees deducted. Notably, customers who opposed the reorganization plan have been excluded from this withdrawal process. Instead, a litigation administrator will independently handle their assets for a duration of six months.
Celsius’s Bankruptcy Journey
Since filing for bankruptcy in July 2022, Celsius has faced a series of legal hurdles. In March, a settlement plan received endorsement, committing to providing deposit account holders with 72.5% of their funds in two installments throughout 2023.
A subsequent update in September saw creditors approving the company’s reorganization plan. This approval paved the way for the distribution of approximately $2 billion in Bitcoin and Ether. The equity of the company will be transferred to NewCo, overseen by the Fahrenheit consortium. Notably, in a recent announcement on Nov. 20, Celsius revealed that the core business of the restructured NewCo company would shift towards Bitcoin mining instead of staking.
Celsius has not only been navigating through bankruptcy proceedings but has also faced legal challenges from various regulatory entities. Lawsuits from the U.S. Securities and Exchange Commission, the Federal Trade Commission (FTC), and the Commodity Futures Trading Commission have been filed against the company and its CEO, Alex Mashinsky. These legal actions primarily revolve around accusations of customer deception. Despite reaching a settlement of $4.7 billion with the FTC, Alex Mashinsky is set to face a criminal trial.