Bankrupt cryptocurrency lending platform Celsius has started withdrawals for select users in a crucial development for the company and its clients amid financial instability and legal issues.
According to a filing in the United States Bankruptcy Court for the Southern District of New York, participants in its custody program falling under “Class 6A General Custody Claims” and “Class 6B Withdrawable Custody Claims” are now eligible for fund withdrawals, with a deadline for withdrawals set for Feb. 28, 2024.
Eligible participants can withdraw 72.5% of their cryptocurrency holdings minus transaction fees. Customers who opposed the reorganization plan were excluded. Instead, a litigation administrator will handle their assets independently for a duration of six months.
Following its bankruptcy filing in July 2022, the platform has navigated various legal obstacles. In March, a settlement plan was endorsed, pledging deposit account holders 72.5% of their funds in two installments throughout 2023.
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In a subsequent update, creditors approved the company’s reorganization plan in September, paving the way to distribute around $2 billion in Bitcoin (BTC) and Ether (ETH). The company’s equity will be transferred to NewCo, overseen by the Fahrenheit consortium. In a Nov. 20 announcement, Celsius said the core business of the NewCo company proposed under its restructuring plan will be Bitcoin mining rather than staking.
Celsius has been maneuvering through bankruptcy proceedings and legal challenges from multiple regulatory entities. The U.S. Securities and Exchange Commission, the Federal Trade Commission (FTC) and the Commodity Futures Trading Commission all filed lawsuits against the company and its CEO, Alex Mashinsky, primarily centered on accusations of customer deception. Although Celsius reached a settlement of $4.7 billion with the FTC, Mashinsky will face a criminal trial.
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