Key takeaways:
- In the face of unstable finances and legal troubles, the bankrupt cryptocurrency lending platform Celsius has begun to withdraw funds for a limited number of customers.
- Participants who meet the requirements can withdraw 72.5% of their cryptocurrency holdings after deducting transaction costs.
In the face of unstable finances and legal troubles, the bankrupt cryptocurrency lending platform Celsius has begun to withdraw funds for a limited number of customers. This is an essential move for the company and its clients.
Participants in the custody program falling under “Class 6A General Custody Claims” and “Class 6B Withdrawable Custody Claims” are now eligible for fund withdrawals, with a deadline for withdrawals set for February 28, 2024, according to a filing in the United States Bankruptcy Court for the Southern District of New York.
Participants who meet the requirements can withdraw 72.5% of their cryptocurrency holdings after deducting transaction costs. Clients who disagreed with the restructuring strategy were not welcome. Rather, their assets will be managed independently by a lawsuit administrator for a period of six months.
After declaring bankruptcy in July 2022, the platform has had to overcome a number of legal challenges. A settlement agreement that promised deposit account holders 72.5% of their money in two installments over the course of 2023 was approved in March.
In September, the company’s reorganization plan was authorized by creditors, opening the door for the distribution of around $2 billion in Bitcoin and Ether, according to a later update. The Fahrenheit consortium will take control of NewCo and receive the company’s stock.
In a statement released on November 20, Celsius stated that mining Bitcoin will be the primary activity of the NewCo company, as opposed to staking, as part of its restructuring plan.
Celsius has been navigating through legal objections from numerous regulatory bodies as well as insolvency processes. The company and its CEO, Alex Mashinsky, were the target of litigation from the US Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), and the Commodity Futures Trading Commission (CFTC).
The complaints were primarily focused on allegations of deceiving customers. Despite reaching a $4.7 billion settlement with the FTC, Mashinsky will go through a criminal trial with Celsius.
