Celsius, the cryptocurrency lending platform that filed for bankruptcy in July 2022, has started withdrawals for select users. This development represents a crucial juncture for the company and its clients amid financial instability and legal problems.
According to the presentationCustody Program participants falling under “Class 6A General Custody Claims” and “Class 6B Withdrawable Custody Claims” are now eligible for withdrawals, with a deadline set by the platform for these transactions until February 28 of 2024.
Eligible participants can withdraw 72.5% of their cryptocurrency holdings, subject to transaction fees that reduce the total. Clients who opposed the reorganization plan are excluded from this opportunity. Instead, a litigation manager will manage your assets independently for a period of six months.
Celsius has encountered numerous challenges on its way to this stage. After filing for bankruptcy last summer, the platform navigated several legal obstacles. A liquidation plan was approved in March, promising deposit account holders 72.5% of their funds in two installments throughout 2023.
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In a later update, creditors’ approval of the company’s reorganization plan in September paved the way for it to distribute around $2 billion worth of bitcoin and Ether. The company’s capital will be transferred to NewCo, supervised by the Fahrenheit consortium. In a Nov. 20 announcement, Celsius said the core business of the company “NewCo” proposed in its restructuring plan will be bitcoin mining rather than gambling.
Celsius has been maneuvering through bankruptcy proceedings and legal challenges from multiple regulatory entities. The SEC, FTC and CFTC filed lawsuits against the company and its CEO, Alex Mashinsky, primarily focused on allegations of customer deception. Although Celsius reached a $4.7 billion settlement with the FTC, Mashinsky will face a criminal trial next fall.
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