Celsius Takes Action to Recover Funds
The crypto lending firm Celsius, which recently filed for bankruptcy, is making a bold move to regain funds from customers who made large withdrawals shortly before the bankruptcy declaration. Celsius is targeting customers who borrowed more than $100,000 in the three months leading up to July 13, 2022, when the bankruptcy was filed.
Celsius formally filed its intent on January 9, announcing its plan to address the withdrawals made by these customers. The company may request that those with “withdrawal preference exposure” over $100,000 return a portion of the funds. If these customers refuse, Celsius is prepared to take legal action against them.
Legal Action for Non-Compliant Customers
In its filing, Celsius outlines a potential resolution for affected customers. Those who have “withdrawal preference exposure” exceeding $100,000 and have not rejected the reorganization plan or opted out of releases have the option to settle their liability. They must pay 27.5% of the funds by January 31, 2024, to do so.
Customers interested in settling must act quickly, as the deadline to submit the election form indicating their intent to make the settlement payment is January 25. Those who choose to settle will receive a release from avoidance actions and distributions under the reorganization plan. Failing to settle by the deadline may result in legal consequences.
Customers who do not settle by January 31, 2024, may face repercussions. The Litigation Administrator will step in after the Effective Date to address any unresolved “Withdrawal Preference Exposure.” Non-compliant customers may receive separate correspondence or face legal action to recover the preferences they received.
Celsius’ Bankruptcy and Restructuring
Celsius filed for bankruptcy in 2022 after reporting a $1.2 billion deficit in its balance sheet and temporarily halting customer withdrawals. The restructuring plan, approved by Judge Martin Glenn, involves repaying customers using crypto assets and shares in a newly publicly listed Bitcoin mining company.
Following the bankruptcy, Celsius is taking strategic measures to honor its commitments. The company is actively unstaking and withdrawing Ethereum, preparing for timely distributions to creditors.
As Celsius undergoes critical restructuring, it is setting a precedent by seeking to recover funds from customers. This demonstrates the company’s commitment to financial accountability.
Hot Take: Celsius Takes a Stand to Regain Lost Funds
Celsius’ decision to pursue customers who made significant withdrawals before its bankruptcy is a bold move that shows the company’s determination to recoup lost funds. By targeting customers who borrowed over $100,000, Celsius is taking a tough stance on financial accountability.
This legal action is part of Celsius’ wider restructuring efforts, which aim to repay customers using crypto assets and shares in a new Bitcoin mining company. As Celsius seeks to settle with creditors, it is making it clear that it will not hesitate to pursue legal means to recover funds.
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