Celsius to begin second payout of 127M dollars to creditors
Celsius, the now-bankrupt cryptocurrency lender, is making a second payment from its bankruptcy proceedings, allocating $127 million to qualified creditors, per a court filing submitted on Wednesday, November 27.
Celsius will soon begin a second distribution of $127 million made available from the Litigation Recovery Account to eligible creditors (Classes 2, 5, 7, 8, and 9). Distributions will be made in BTC or USD, based on eligibility. For more details, please refer to this notice:…
— Celsius (@CelsiusNetwork) November 27, 2024
Creditors of classes 2, 5, 7, 8, and 9 will receive the distribution, which is being made available from the "Litigation Recovery Account," according to the post.
The Celsius bankruptcy plan administrators began its first payment of $2 billion in cryptocurrency to 171,672 creditors in January of this year. Of the eligible claims, 57.65% were recovered.
Celsius to begin second payout to roughly 60% of eligible creditors
If, by November 25, 2024, the Post-Effective Date, a creditor who was supposed to receive a distribution through Coinbase on the Effective Date or who switched from PayPal to Coinbase after the Effective Date did not receive a distribution through Coinbase, Debtors will still hold liquid cryptocurrency due to the creditor's initial and second distributions and will convert it to cash as close as is practically possible to the anticipated cash distribution date.
The amount of Bitcoin that will be disbursed to eligible creditors in relation to their Allowed Claims will be decided by the post-effective date debtors using a weighted price of $95,836.23, which is the price at which they bought Bitcoin with the funds from the litigation administrator. As a result of the Second Distribution, each Eligible Creditor will receive a cumulative distribution in cash or liquid cryptocurrency equal to approximately 60.4% of the value of such creditor’s claims as of the petition date, the post added.
As with the previous distribution, the post-effective date debtors will send an email to the eligible creditors designated to receive their second distribution in liquid cryptocurrency from PayPal, Venmo, or Coinbase. According to the filing, eligible creditors will be instructed to receive the payout in cash if they are unable to obtain liquid cryptocurrency through the designated distribution agent.
In March, some Celsius corporate creditors said that because the debtors' estate only used Coinbase to handle distributions, they were receiving 30% lower payments.
AML/KYC compliance information required
In addition to completing and passing AML/KYC compliance checks for their Celsius Account, all eligible creditors may also need to register and/or complete additional onboarding with their designated Distribution Agent, which may involve supplying any AML/KYC compliance information that the Distribution Agent requests.
Major crypto lender Celsius declares bankruptcy
After a $1.2 billion hole was found in its balance sheet, Celsius declared bankruptcy in 2022. Celsius estimated that it had over 100,000 creditors and between $1 billion and $10 billion in assets and liabilities in a court filing at the U.S. Bankruptcy Court for the Southern District of New York. The company's cash balance is $167 million, Reuters reported. In November, the company came out of bankruptcy.
The Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Federal Trade Commission filed lawsuits against Celsius and former CEO Alex Mashinsky last year for allegedly deceiving customers. Mashinsky was charged with fraud in July 2023, and his trial is expected to start in January next year, with the possibility of facing a maximum prison term of 115 years.
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