Celsius Network Emerges Victorious: Reaches Settlements to Exit Bankruptcy

Celsius Network, the crypto lender that faced bankruptcy, has managed to reach two crucial settlements that will pave the way for returning assets to its customers and putting an end to its bankruptcy proceedings. According to court filings on July 20, these settlements represent significant milestones for the company’s future.

The settlements, totaling $78.2 billion in unsecured claims, will be thoroughly examined by Judge Martin Glenn during a hearing scheduled for August 10. Interested parties are expected to submit any responses and objections to the court by August 3.

One of the settlements addresses claims related to accusations of fraud and misrepresentation by Celsius management. As part of this agreement, customers’ recoveries will be increased by 5%, providing some compensation for any alleged wrongdoing. Additionally, account holders will have the option to pursue individual claims against Celsius if they choose to opt out of the settlement. According to the court documents, those who do not opt out will receive a claim equivalent to 105% of their scheduled claim, effectively supplanting any related Proofs of Claim previously filed.

The second settlement addresses the interests of customers with funds in Celsius’ interest-bearing Earn program. Under this proposed agreement, customers who previously borrowed crypto funds will have the opportunity to receive a portion of their funds in crypto assets. Additionally, they will receive compensation in shares of the new company that emerges from the bankruptcy proceedings.

This progress comes after Celsius filed for Chapter 11 bankruptcy in July 2022, a move prompted by the market turbulence caused by the collapse of the Terra ecosystem, leading to a halt in all withdrawals. A year later, on July 13, 2023, the company’s former CEO, Alex Mashinsky, was arrested on criminal and civil charges of fraud and market manipulation. However, he has maintained his plea of not guilty to all charges.

In another legal setback, the Securities and Exchange Commission (SEC) also filed a lawsuit against Mashinsky and other Celsius executives. The lawsuit accused them of raising “billions of dollars” through unregistered and fraudulent offers and selling “crypto asset securities.” Additionally, the Federal Trade Commission (FTC) initiated civil cases against the former CEO, and the lending platform itself faced a hefty $4.7 billion fine for allegedly “squandering billions in user deposits” and “duping” its users.

Despite the turbulent legal landscape, the recent settlements signal a ray of hope for Celsius Network, as it takes steps towards resolving its bankruptcy issues and redressing customer concerns.

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