$127M Payout to Creditors: What’s Next for Celsius
Celsius Network has initiated its second distribution of $127 million to eligible creditors as part of its ongoing bankruptcy proceedings, following the company’s collapse in July 2022. This latest payout raises the total recovery rate for creditors to 60.4% of their eligible claims, building on an initial distribution made in January 2024, which covered approximately 57.65% of claims in liquid crypto assets or cash.
The second distribution primarily consists of liquid crypto assets, with funds converted to Bitcoin at an average price of $95,836.23 per BTC to align with claim values. Payments are being made across various creditor categories, including retail deposit claims, general income claims, and unsecured loan claims. Notably, creditors who opted out of receiving crypto payments or faced logistical challenges during the first distribution will receive cash instead.
As the restructuring process unfolds, former Celsius CEO Alex Mashinsky is set to face a jury trial beginning on January 28, 2025, with a pre-trial hearing scheduled for January 16, 2025. This legal action is part of broader efforts to address the financial fallout from Celsius’s bankruptcy, which has involved complex adversary proceedings against numerous consumer creditors.
The significance of Mashinsky’s trial extends beyond his personal fate; it symbolizes a turning point for regulatory scrutiny and investor protection in the cryptocurrency sector.
The collapse of Celsius Network, which once managed billions in assets and promised high returns to its customers, has already prompted investigations by the U.S. Securities and Exchange Commission (SEC) and other regulatory bodies. These investigations accuse Mashinsky of misleading investors about the company’s financial health and engaging in fraudulent activities that contributed to its downfall.
Mashinsky’s defense strategy focuses on asserting that he did not intend to defraud anyone, claiming that he relied on his team’s expertise and was unaware of any wrongdoing. He plans to call several former executives as witnesses to support his claims, arguing that any mismanagement or fraudulent actions were conducted without his knowledge. This defense could influence the trial’s outcome and potentially set a precedent for how similar cases are treated in the future.
The trial’s outcome will likely impact not only Mashinsky but also the future regulatory landscape for cryptocurrency platforms. As more high-profile figures face legal challenges, including FTX founder Sam Bankman-Fried.
The Celsius bankruptcy case has been significant in the cryptocurrency sector, not only due to its scale but also because it has raised critical questions about the treatment of creditors and the regulatory landscape surrounding digital assets.
As these proceedings continue, they are expected to set important precedents for future cryptocurrency insolvencies
Angel Marinov is the Managing Editor at Coinlabz. With extensive knowledge of crypto payments and blockchain use cases, Angel is a trusted source of accurate and timely information
