- Celsius, a cryptocurrency lending platform that filed for bankruptcy in July 2022, has started allowing some users to withdraw funds from their accounts. Eligible users can withdraw 72.5% of their crypto holdings minus fees.
- Celsius has faced legal challenges like lawsuits from regulators since its bankruptcy filing. It reached a settlement with the FTC but its CEO still faces criminal charges.
- Under Celsius’ restructuring plan, its equity will transfer to a new entity called NewCo that will focus on Bitcoin mining rather than staking. Withdrawals mark progress but legal issues persist.
Cryptocurrency lending platform Celsius has started withdrawals for some users, marking a crucial development amid its ongoing bankruptcy proceedings. The company filed for bankruptcy in July 2022 and has since faced legal challenges from regulators while working on a restructuring plan.
Eligibility for Withdrawals
Participants in Celsius’ custody program under Class 6A General Custody Claims and Class 6B Withdrawable Custody Claims are now eligible to withdraw funds by February 28, 2024. Eligible users can withdraw 72.5% of their cryptocurrency holdings minus transaction fees. Customers who opposed Celsius’ reorganization plan were excluded. Instead, a litigation administrator will handle their assets independently for six months.
Background on Celsius Bankruptcy
Following its bankruptcy filing, Celsius has navigated various legal obstacles. In March, a settlement plan was approved, pledging 72.5% of depositors’ funds in two installments in 2023. Creditors later approved a reorganization plan in September, allowing Celsius to distribute around $2 billion in crypto assets.
Celsius has also faced lawsuits from the SEC, CFTC, and FTC, primarily over allegations of deceiving customers. While Celsius reached a $47 billion settlement with the FTC, its CEO Alex Mashinsky still faces criminal charges.
The company’s equity will transfer to a new entity called NewCo under the proposed restructuring plan. NewCo will focus on Bitcoin mining rather than staking.
The partial withdrawals mark major progress for Celsius as it works through bankruptcy proceedings. However, legal challenges remain ongoing even as the company takes steps to distribute assets to eligible users. The outcome of criminal charges against its CEO also remains uncertain amid Celsius’ transition to a new corporate entity.