The failed platform believes its creditors should pay back the money they withdrew before it collapsed
Bankrupt cryptocurrency lender Celsius declared that creditors who made large withdrawals of funds ahead of the company filing for bankruptcy may be required to return some of those funds or be subject to legal action.
Celsius bankruptcy managers filed an intent to notify its creditors on January 9, stating that account holders who withdrew over $100,000 in the 90 days prior to declaring bankruptcy on July 13, 2022, may be required to return the funds.
The document states that creditors with “withdrawal preference exposure” over $100,000 who are included parties and didn’t vote against the reorganization plan or opt out of releases can resolve their liability if they return 27.5% of the funds withdrawn by January 31.
Parties looking to settle should present an election form by January 25 demonstrating their intention to make payment.
Creditors not settling before the deadline will have their withdrawal preference exposure reviewed by administrators, who could decide to sue in order to recover the funds withdrawn. “Any Withdrawal Preference Exposure that is not settled by January 31, 2024, will be addressed by the Litigation Administrator after the Effective Date through separate correspondence or other action,” states the filing.
Celsius administrators allowed eligible participants to access some of their cryptocurrency holdings in November 2023.
The company has been actively withdrawing Ethereum to prepare for “timely distributions to creditors.” According to blockchain analytics platform Nansen, it currently makes up 20.3% of the withdrawal queue, with 112,037 Ether worth about $266 million.
Celsius announced a scaled-back post-bankruptcy plan to concentrate on Bitcoin mining in November 2023, which was authorized by the presiding judge in the bankruptcy proceedings in late December.
