In a recent development in the ongoing Celsius bankruptcy saga, the embattled crypto lending platform announced its second round of payouts to creditors. According to a court filing on November 27, 2024, Celsius will soon begin distributing $127 million to eligible creditors across five classes, including retail borrower deposit claims, general earn claims, withhold claims, unsecured loan claims, and general unsecured claims.
A Glimmer of Hope for Creditors
The upcoming distribution marks a significant step forward for creditors who have been eagerly awaiting the return of their funds since Celsius filed for Chapter 11 bankruptcy relief on July 13, 2022. The collapse of the once-prominent crypto lending platform sent shockwaves through the industry, leaving countless investors and users in limbo.
Under the current payout plan, each eligible creditor is set to receive 60.4% of the value of their claim as of the Petition Date. This follows a much larger initial distribution in August, which saw Celsius disburse over $2.53 billion to more than 251,000 creditors, covering approximately two-thirds of all eligible creditors and 93% of the eligible value.
The Road to Recovery
Celsius emerged from Chapter 11 bankruptcy in January 2024 and has since been working to reimburse creditors and rebuild trust in the crypto community. As part of its restructuring efforts, the company shut down its mobile and web apps on February 29, focusing its resources on the repayment process.
In addition to the cash payouts, some creditors also received shares in Ionic Digital, a company formed from Celsius’ reorganized mining business. This move aims to provide creditors with potential long-term value as the crypto market continues to evolve.
Legal Troubles Loom for Former CEO
While creditors await their second payout, Celsius’ former CEO, Alex Mashinsky, is preparing to face trial in the United States on fraud charges. Mashinsky, who resigned from his position in September 2022, was arrested last year following allegations of market manipulation and fraud.
According to a source close to the matter, Mashinsky’s trial is set to begin in January 2025, putting the disgraced executive in the spotlight once again.
Roni Cohen-Pavon, Celsius’ former Chief Revenue Officer, has already pled guilty to similar charges and is due to be sentenced next month. The company itself reached a $4.7 billion settlement with U.S. authorities over fraud allegations last year.
Lessons Learned and the Future of Crypto Lending
The Celsius bankruptcy has served as a cautionary tale for the crypto industry, highlighting the risks associated with unregulated lending platforms and the importance of transparency and proper risk management. As the market matures, regulators and industry leaders are working to establish clearer guidelines and safeguards to protect investors and prevent similar incidents from occurring in the future.
Despite the challenges faced by Celsius and its creditors, the upcoming payout offers a glimmer of hope for those affected by the platform’s collapse. As the bankruptcy proceedings continue and the legal consequences unfold for its former executives, the crypto community remains focused on rebuilding trust and fostering a more stable and sustainable ecosystem for all participants.
