Key takeaways:
- Galaxy Digital acquired Celsius’s self-custody platform GK8 in connection with bankruptcy proceedings in December.
- The shareholders suggested setting aside $24 million for legal fees and distributing the remaining $1 million among the holders.
In its motion regarding the division of proceeds from the sale of the self-custody platform GK8, the bankrupt cryptocurrency lending company Celsius has pleaded with the court to grant relief.
The Series B holders of Celsius Network have agreed to a settlement that would see them receive $25 million from the sale of GK8, according to a document made by the company’s creditors on July 17. The debtors, the creditors’ committee, and the initial agreed-upon Series B preferred holders came to an agreement.
At first, some Series B shareholders contended that the $24 million allotted did not fully cover their legal costs, and others claimed that the $1 million represented an unjust “windfall” for a particular party. The document states:
“In light of the fact that the primary purpose of the settlement is to reduce administrative costs, the debtors agreed to and remain supportive of the proposed allocation, which provides the initial consenting Series B holders with reciprocal benefits,”
According to the court record, the settlement agreement was based on the parties’ “mutual desire” to avoid expensive litigation and a drawn-out confirmation procedure with a corresponding rise in professional expenses. The document claims:
“The settlement not only unlocks tremendous value for the debtors’ creditors but also affords the debtors and all parties priceless certainty of the way forward. For the reasons set forth herein and the motion, the court should overrule the objections and grant the relief requested in the motion.”
Celsius paid $115 million to purchase the Israeli self-custody business GK8 in late 2021. Following Celsius’ collapse in 2022, the distressed crypto lender was shortly obliged to sell GK8 as part of its restructuring strategy.
The investment company Galaxy Digital, which Mike Novogratz runs, won the bid to purchase GK8 in late 2022. Along with a Tel Aviv office, the 40 experts on the GK8 team, including cryptographers and blockchain technologists, were purchased by Galaxy as part of the transaction. GK8 convened a gathering of financial professionals in its New York offices in July 2023.
The news is released in mid-July, as Celsius deals with several legal matters. Along with news of former CEO Alex Mashinsky’s arrest, the United States Securities and Exchange Commission filed a complaint against Celsius on July 13. The US Federal Trade Commission fined Celsius $4.7 billion the same day.
