Cryptocurrency lending platform Celsius, which faced bankruptcy in 2022 following allegations of fraud by the Commodity Futures Trading Commission (CFTC), has just announced some encouraging news for its creditors. Under a plan recently approved by the court, the funds currently frozen on the platform will soon be distributed. Details of the plan, and how creditors will be able to recover their funds, will be set out later in this article.
On 28 December 2023, the Bankruptcy Court for the Southern District of New York took a decisive step in the Celsius case by approving its repayment plan. This decision follows a positive vote by the majority of creditors in September 2023, paving the way for a partial resolution of the crisis. Under the terms of the approved plan, Celsius' eligible creditors will be repaid between 67% and 85% of their assets. The exact percentage depends on the nature of the assets they held on the platform. This measure represents a significant turning point for the many investors affected by the platform's difficulties.
Those who made withdrawals of $100,000 or more in the 30 days prior to 13 July 2022 are required to return 27.5% of these amounts by 31 January 2024, or face legal action.
The repayment plan also includes the sale of Celsius' assets to Fahrenheit Holdings, a consortium led by Arrington Capital and U.S. Bitcoin Corp, which specialises in cryptocurrency mining. This transaction marks the birth of NewCo, a new company that will take over Celsius' activities. As part of the restructuring, Celsius' creditors will receive not only a portion of their funds, but also shares in the new entity, which will focus primarily on bitcoin mining. The move, which follows the consortium's successful takeover bid in May 2023, opens a new chapter for former Celsius users and the cryptocurrency industry in general.
According to a Celsius press release, the distribution of funds to creditors is scheduled for around 31 January 2024. This operation will be carried out via the Coinbase platform, which has been carefully selected to guarantee the security and speed of transfers. In order to receive their funds, creditors will need to have a Coinbase account and provide the necessary information, including ensuring that their email address matches between Celsius and Coinbase.
The return will consist mainly of bitcoins and ethers, the main assets in the Celsius portfolio. To ensure adequate liquidity, the company has already released staked ethers on the Ethereum blockchain. Creditors will also be offered the option of receiving their repayments in fiat currency, if they so wish.
With the announcement of a repayment plan, these same creditors find themselves at the dawn of a new chapter, with the hope of recovering some of their lost investments. This development represents a significant relief for the many individuals and entities affected by the fall of Celsius.
Celsius creditors are urged to remain vigilant to the risk of phishing attacks. With the anticipated receipt of their assets, there is a potential threat that cybercriminals will seek to exploit the situation by posing as representatives of Celsius or associated entities.
Incidents of phishing have already been reported, with inducements to divulge sensitive information.
Faced with this situation, it is vital for creditors to remain vigilant and stick to official communications from reliable sources.
Creditors should regularly check the Celsius X account or the liquidation page on the Celsius network website for genuine updates. In case of doubt or suspicious contact, creditors are advised to email CelsiusCreditorQuestions@kirkland.com for clarification or to report suspicious activity.
Creditors are also advised to avoid clicking on unverified links and to ensure that all information is obtained directly from legitimate sources. For optimum security, it is important to note that the only valid email address for official communications is noreply@cases-cr.stretto-services.com.
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