Celsius Network, the bankrupt crypto lender, has charted a path toward resolution, paving the way for customer asset restitution.

This has been made possible through two significant settlements, as indicated by court papers released on July 20th.

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These settlements, encompassing an overwhelming $78.2 billion in unsecured claims, will be scrutinized by Judge Martin Glenn in a hearing set for August 10th. Any objections or responses about this matter should be brought before the court no later than August 3rd.

The first settlement seeks to solve the allegations of fraud and misrepresentation leveled against the Celsius management by ensuring an enhanced 5% recovery for the customers.

Despite the settlement, customers retain the right to launch individual lawsuits against Celsius, granted they opt out of the settlement. As indicated in the court documents:

Any eligible Account Holder who does not opt out of the Settlement will receive a claim in the amount of 105% of their scheduled claim, which will supersede and extinguish any related Proofs of Claim filed by such Account Holder.

On the other hand, the second agreement aims to compensate customers who held funds in Celsius’ interest-bearing Earn program. As part of the proposed settlement, these customers, who had borrowed crypto funds, can now expect to regain a portion of their funds in crypto assets and receive shares in the newly emerging company from the bankruptcy resolution.

<…> creditors have agreed to support an amended Plan that will provide Holders of Retail Borrower Deposit Claims with (a) the option to repay their principal balance of their loan <…> in exchange for an equivalent amount of cryptocurrency (which could lead to tax benefits for such Holders as compared to the Setoff Treatment) and (b) priority in electing a preference to exchange the NewCo Equity for Liquid Cryptocurrency at a 30% discount <…>.

In July 2022, Celsius Network was forced to declare Chapter 11 bankruptcy due to the adverse market fallout triggered by the crash of the Terra ecosystem. In a further blow, Alex Mashinsky, the former CEO, was arrested on July 13th, 2023, on charges of fraud and market manipulation, to which he pleaded not guilty.

The announcement of the two settlements for Celsius Network brings a glimmer of hope, potentially offering a path toward resolution and restitution for its clients.

Edited by:

Gile K.,

Market Sentiment Analyst

Gile is a Market Sentiment Analyst who understands what public events may form what emotions. Her experience researching Web3 news and public market messages – including cryptocurrency news reports, PRs, and social network streams – is critical to her role in helping lead the Crypto News Editorial Team.
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