In a significant development for creditors, Celsius, the struggling cryptocurrency lending platform currently undergoing bankruptcy proceedings, has announced plans to distribute an additional $127 million from its Litigation Recovery Fund.
This update was shared on November 28, creating a buzz among those owed money by the firm.
The distribution will primarily benefit creditors grouped in classes 2, 5, 7, 8, and 9.
Distribution Details
Details regarding this allocation were outlined in a Notice of Commencement filed in the Southern District of New York bankruptcy court on November 27.
The beneficiaries of this payout include retail borrowers, depositors, and participants in the Earn program, as well as creditors holding unsecured loans or general unsecured claims.
However, those with convenience claims, or who do not qualify for illiquid recovery rights, will unfortunately miss out on these distributions.
Payment Methods
To facilitate the payments, Celsius will use the same platforms that handled the previous disbursements.
Creditors can look forward to receiving funds via popular services like PayPal, Venmo, or Coinbase.
For anyone lacking a verified account on these platforms, the company will issue cash payments instead.
While corporate creditors may also receive some compensation, individuals with convenience claims will not be included in this round.
Background and Ongoing Challenges
Despite this announced payout, many cryptocurrency users have expressed their dissatisfaction on social media.
The sentiment is that the sum seems inadequate, and the timing raises eyebrows.
Some investors are feeling particularly disheartened, citing substantial losses and expressing feelings of betrayal over their investments in Bitcoin.
In a related note, some corporate creditors reported that their payouts were cut by 30% back in March, as the distribution process relied solely on Coinbase.
Celsius’s troubles began when the firm filed for bankruptcy in July 2022, amid rising concerns over its financial stability.
The former CEO, Alex Mashinsky, was arrested in July 2023 and faces serious fraud charges for allegedly misleading depositors about the associated risks of their investments.
His trial is scheduled to begin in January 2025, adding another layer of complexity to the firm’s unfolding saga.
Source: Cointelegraph
