Celsius Network Requires Repayment for Recent Withdrawals
The bankrupt crypto lender, Celsius Network, has informed its creditors that customers who made significant withdrawals within 90 days prior to the bankruptcy declaration may need to return a portion of the funds or face legal consequences.
Clawbacks for High Withdrawals
According to a notice published by Celsius bankruptcy managers, account holders who withdrew over $100,000 in the 90 days before July 13, 2022 (the date of the bankruptcy filing), are subject to clawbacks.
Payment and Eligibility
Affected account holders will receive letters instructing them to make a payment equivalent to 27.5% of the amount withdrawn during that period. Compliance will make them eligible for future distributions under the reorganization plan.
Instructions for Lower Withdrawals
Users who withdrew less than $100,000 prior to the bankruptcy are not required to return the funds but must vote in favor of the plan and refrain from opting out of the outlined releases.
Consequences of Non-Compliance
Failing to comply with these instructions may result in potential lawsuits against non-compliant individuals.
Celsius Network’s Bankruptcy Filing
Celsius Network filed for Chapter 11 bankruptcy after the collapse of the Terra blockchain ecosystem in mid-2022. The company reported having assets and liabilities between $1 billion and $10 billion, with over 100,000 creditors. Customer accounts were frozen for about a month prior to the bankruptcy filing.
Former CEO’s Resignation and Legal Troubles
Alex Mashinsky, Celsius Network’s former CEO, resigned in June 2023. He was later arrested in July and is currently out on a $40 million bail. Mashinsky is scheduled to face a criminal trial starting on September 17, 2024.
Hot Take: Celsius Network Requires Repayment for Recent Withdrawals
Celsius Network, the bankrupt crypto lender, is demanding that customers who made substantial withdrawals in the 90 days leading up to the bankruptcy declaration return a portion of the funds or face legal consequences. While smaller withdrawals are exempt, account holders who withdrew over $100,000 during that period must comply with the repayment request to be eligible for future distributions under the reorganization plan. Failure to comply could result in potential lawsuits. This development comes after Celsius Network filed for Chapter 11 bankruptcy following the collapse of the Terra blockchain ecosystem. The former CEO, Alex Mashinsky, resigned and is now facing legal troubles with a criminal trial scheduled for September 2024.
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