Bankrupt Crypto Platform Celsius Allocates $2 Billion Worth of Cryptocurrency to Creditors
Bankrupt cryptocurrency platform Celsius has distributed $2 billion worth of cryptocurrency to its creditors as part of its strategy to meet its obligations. The distribution comes after the company emerged from bankruptcy proceedings that were initiated in July 2022.
According to the law firm Kirkland & Ellis, which is advising Celsius, the distributions to U.S. holders are being conducted through PayPal, while Coinbase is handling the distributions for overseas holders. The firm confirmed that $2 billion in cryptocurrency assets, including 20,255.66 Bitcoin and 301,338.77 Ether, have been transferred to the creditors. This method of direct distribution has helped expedite the process.
Celsius Network LLC filed for Chapter 11 bankruptcy on July 13, 2022, following the management of approximately $25 billion in customer assets. As a result of the bankruptcy filing, the company's founder and former CEO, Alex Mashinsky, was arrested and charged with multiple offenses, including securities, commodities, and wire fraud. Mashinsky and other key executives are accused of misrepresenting the company's business model and manipulating the value of its proprietary crypto token, CEL.
In addition to the criminal charges, both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have filed civil charges against Mashinsky and Celsius. The company also reached a settlement with the Federal Trade Commission (FTC), agreeing to pay a $4.7 billion fine that is contingent on reimbursing the creditors. This settlement marks one of the largest in FTC history.
Mashinsky has pleaded not guilty to seven felony counts and was released on a $40 million bond. His trial is set to commence on September 17. Meanwhile, Celsius has announced plans to unstake its Ethereum holdings in order to address restructuring expenses and accelerate the distribution of funds to creditors. These events, including the bankruptcy and legal actions against Mashinsky and Celsius, underscore the importance of transparency, accountability, and regulatory compliance in the cryptocurrency industry.
Analyst comment
Negative news: The bankruptcy and legal actions against Celsius and its founder highlight misconduct and lack of regulatory compliance in the cryptocurrency industry. The market may face increased scrutiny and investor skepticism, leading to a temporary decline in confidence and potentially affecting cryptocurrency prices.
