Celsius, the cryptocurrency lending platform that declared bankruptcy in July 2022, has initiated withdrawals for select users. This development signifies a crucial juncture for the company and its clients amid financial instability and legal issues.
According to the filing, participants in the Custody Program falling under “Class 6A General Custody Claims” and “Class 6B Withdrawable Custody Claims” are now eligible for fund withdrawals, with a deadline set by the platform for these transactions until Feb. 28, 2024.
Eligible participants can withdraw 72.5% of their cryptocurrency holdings, subject to transaction fees reducing the total. Customers who opposed the reorganization plan are excluded from this opportunity. Instead, a Litigation Administrator will handle their assets independently for a duration of six months.
Celsius has encountered numerous challenges on its journey to this stage. Following its bankruptcy filing last summer, the platform 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’ approval of the company’s reorganization plan in Sept. paved the way to distribute around $2 billion in Bitcoin and Ether. 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 SEC, FTC, and CFTC 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 is set to undergo a criminal trial in the upcoming fall.
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