After announcing that they would transfer another $127 million to creditors from their ‘Litigation Recovery Account,’ bankrupt crypto lender Celsius Network said it would distribute an extra $127 million to creditors on Tuesday. According to a court notice filed Nov. 27 in the United States Bankruptcy Court for the Southern District of New York, the payment will go to classes 2, 5, 7, 8 and 9 of creditors.
The funds will benefit retail borrowers, Celsius’s ‘Earn’ program users, and those with withheld, unsecured loans or general unsecured claims. However, creditors with convenience claims or an illiquid recovery right are not entitled to this distribution.
The first distribution will pay the creditors like it would you, for example, PayPal, Venmo, and Coinbase. We will pay cash to those not on these platforms with verified accounts. This includes some corporate creditors, but holders of convenience claims will not get their money.
However, creditors are unhappy about the additional payment. Some users decried the amount and the delay on social media platform X. ‘Oh, you guys stole me 0.7 BTC and all sorts of tokens!!’ “Give it back to me!” one user wrote. One lamented losing 8 BTC, calling Celsius executives “thieves” and not accepting the payout as “peanuts.”
Past frustrations have also resurfaced. Some corporate creditors said they received 30 percent less than expected because Celsius relied only on Coinbase for processing distributions.
Collapse And Legal Proceedings With Celsius
Last year, Celsius filed for bankruptcy after struggling with liquidity caused by the crackdown on the wider crypto market. Former CEO Alex Mashinsky was arrested and charged with fraud in July 2023 for allegedly deceiving depositors about the platform’s risks. He is to be tried in January 2025.
This latest distribution represents a step forward in Celsius’s efforts to compensate creditors, but the remaining creditors are still seething at how far short the restitution falls, given their losses.
