Key Takeaways
- The account holder will receive their 72.5% claim in two distributions
- The claimant is refrained from pursuing any litigation, including seeking relief from the automatic stay, turnover, or other claims or causes of action.
US Bankruptcy Judge has now approved a settlement allowing bankrupt Celsius Custody account users to claim 72.5% of their crypto holdings.
The settlement agreement comes with its own set of rules. Under the agreement, if the account holder opts in for a claim, they should refrain from pursuing any litigation, which includes seeking relief from the automatic stay, turnover, or other claims/ causes of action.
The agreement also states that the account holders would receive their 72.5% claim in 2 distributions. The first 36.25% would be distributed upfront, and the rest, 36.25%, will be given upon plan resolution.
Celsius, which filed for bankruptcy in July 2022, is currently working toward formulating a restructuring plan. Last month, the crypto exchange chose NovaWulf Digital Management as the sponsor for its proposed Chapter 11 bankruptcy restructuring plan.
The plan includes the creation of a new public platform fully owned by Earn creditors named NewCo, with the UCC appointing the majority of the firm’s board members. The plan further calls for the making of a “well-funded litigation trust” to pursue lawsuits against Celsius executives, including former CEO Alex Mashinsky.
Earlier this year, a federal bankruptcy judge ruled crypto deposited into interest-bearing accounts at Celsius Network belonged to the firm. This verdict gave Celsius ownership of the $4.2 billion in crypto that users deposited into its high-interest Earn program.
As per the filing, Celsius had approximately 600,000 accounts in its Earn program, and the accounts held a collective value of approximately $4.2 billion as of July 10, 2022. In another Celsius bankruptcy development, last month Celsius bankruptcy judge authorized the sale of $7.4M worth of Bitmain coupons.
New Jersey-based Celsius froze withdrawals in June, citing “extreme” market conditions, cutting off access to savings for individual investors. When it filed for Chapter 11 bankruptcy in July, the exchange reported $4.3 billion in assets and $5.5 billion in liabilities, primarily owed to its users.
