Celsius Initiates Withdrawals for Select Users
Celsius, the cryptocurrency lending platform that filed for bankruptcy in July 2022, has started allowing withdrawals for certain users. This is a significant development for both the company and its clients, considering the financial instability and legal issues they have faced.
Withdrawals Available for Eligible Participants
According to a filing, participants in the Custody Program falling under “Class 6A General Custody Claims” and “Class 6B Withdrawable Custody Claims” can now withdraw funds. The platform has set a deadline of February 28, 2024, for these transactions.
Eligible participants can withdraw 72.5% of their cryptocurrency holdings, with transaction fees reducing the total amount. However, customers who opposed the reorganization plan are not eligible and their assets will be handled separately by a Litigation Administrator for six months.
Celsius Overcomes Legal Challenges
Celsius has faced numerous challenges on its journey to this point. After filing for bankruptcy last summer, the platform had to navigate various legal obstacles. In March, a settlement plan was approved to provide deposit account holders with 72.5% of their funds in two installments throughout 2023.
Reorganization Plan Approval and Business Shift
In September, creditors approved Celsius’ reorganization plan, which paved the way for distributing approximately $2 billion worth of Bitcoin and Ether. The company’s equity will be transferred to NewCo, managed by the Fahrenheit consortium. In November, Celsius announced that the core business of NewCo will focus on Bitcoin mining instead of staking.
Legal Challenges Continue
Despite progress made in bankruptcy proceedings and settlements with regulatory entities like the FTC, Celsius and its CEO, Alex Mashinsky, still face legal challenges. The SEC, FTC, and CFTC have filed lawsuits against the company, primarily accusing them of deceiving customers. While Celsius reached a $4.7 billion settlement with the FTC, Mashinsky is scheduled to undergo a criminal trial in the near future.
Celsius’ decision to allow withdrawals for select users marks a crucial turning point for the company and its clients amidst financial instability and legal issues. Despite facing bankruptcy proceedings and multiple lawsuits from regulatory entities, Celsius has made progress through settlements and reorganization plans. The company’s shift towards Bitcoin mining under its restructuring plan reflects a strategic decision to adapt to changing market conditions. However, the ongoing legal challenges, including the upcoming criminal trial of CEO Alex Mashinsky, pose continued risks for Celsius. It remains to be seen how the company will navigate these obstacles and rebuild trust with its users.
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