- A bankrupt cryptocurrency lending platform, Celsius Network, has requested the court to grant its petition.
- The creditors, debtors, and the committee agreed on a settlement arrangement.
- Three federal regulators initiate lawsuits against Celsius Network’s former CEO, Alex Mashinsky.
Celsius Network’s Shareholders Plan to Divide Profits from GK8
Celsius Network requested court approval regarding the distribution of proceeds from the sale of GK8, a self-custody platform.
The debtors, the bankrupt crypto lending company, filed a petition stating that the proceeds from GK8, worth $25 million, should be shared. The petition was filed after a consensus agreement was made by its Series B holders.
“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,” the document stated.
Celsius Network acquired the Israeli-based cybersecurity company GK8 in 2021 for $115 million. During Celsius Network’s bankruptcy battles, GK8 was sold to Galaxy Digital, an investment firm, in 2022.
Galaxy Digital acquired GK8’s team of blockchain engineers and cryptographers, including an office in Tel Aviv.
The sale of GK8 was part of a restructuring plan after the crypto lending platform went bankrupt last year.
According to the Court documents, the distribution of proceeds from GK8 was a mutual decision between the creditors, debtors, the first Series B holders, and the committee. The consensus was reached to avoid the expensive litigation costs.
The filing states that,
“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.”
The Series B shareholders agreed to allocate $24 million to settle legal fees. The remaining $1 million will be shared amongst the shareholders.
Celsius Network’s former CEO pleads not guilty.
One year after the crypto lending company went bankrupt, CEO Alex Mashinky was arrested and charged with seven counts of fraud.
Federal prosecutors from Manhattan who instituted legal proceedings against him stated the crypto lending platform operated as a “risky investment fund”.
After his arrest last Thursday, three federal regulators in the US also instituted three civil lawsuits against him.
The Securities Exchange Commission plans to fine Alex Mashinsky and ban him from the cryptocurrency industry. The Federal Trade Commission and the Commodity Futures Trading Commission seek monetary penalties.
Responding to the charges, Alex Mashinsky’s lawyer stated,
“Alex vehemently denies the allegations brought today. He looks forward to vigorously defending himself in court against these baseless charges.”
The former CEO of the bankrupt crypto lending platform has pleaded not guilty to all the seven counts which he was charged with.
Alex was granted bail shortly after his arrest. His bail amount was set at $40 million, with stringent conditions. He has been prohibited from traveling and opening a bank or cryptocurrency account.
