Celsius, the bankrupt cryptocurrency lender, has announced a second distribution of $127 million to its creditors. This bankruptcy distribution, which will be made in cash or cryptocurrency, will cover about 60% of creditors’ claims.
According to recent court documents, creditors will receive a distribution based on the value of their claims as of the date of filing.
A significant portion of the distribution will be made in cryptocurrency, with Bitcoin expected to be valued at an average price of $95,836. The distribution will be made in cash for those who cannot receive cryptocurrency through designated agents.
The decision comes after the company’s first payment, which distributed $2 billion in cryptocurrencies to more than 171,000 creditors. The distribution of the payments marks another step in Celsius’ bankruptcy process, as the company continues to grapple with the challenges of the financial collapse.
Celsius filed for bankruptcy in 2022 after discovering a $1.2 billion gap in its balance sheet, leading to a loss of confidence and a significant drop in assets.
Since then, the company has been implementing its bankruptcy plan, offering partial compensation to creditors affected by the financial collapse. The second payment complements ongoing efforts to repay creditors and resolve the problems that led to the company’s collapse.
CEO faces legal trouble over bankruptcy
With Celsius’ bankruptcy proceedings underway, the company’s former CEO, Alex Mashinsky, is in serious legal trouble.
Mashinsky has been accused of fraud and misleading customers about the company’s financial health, leading to a class action lawsuit filed by several regulators, including the Securities and Exchange Commission (SEC) and the Federal Trade Commission (FTC).
Allegations against Mashinsky include misleading customers about the safety of their investments and the performance of the company’s cryptocurrency lending products. Mashinsky’s motion to dismiss the fraud charges was denied earlier this year. He faces a prison sentence of up to 115 years if convicted.
The fraud charges have added another layer of complexity to Celsius’ already controversial bankruptcy process, as creditors must navigate the company’s legal problems in an attempt to recover their funds.
Legal experts are closely monitoring the case, as it could set a significant precedent for other cryptocurrency lending companies facing similar regulatory challenges. Since its bankruptcy, Celsius has been under intense scrutiny from both regulators and the public.
In addition to the Celsius bankruptcy, another cryptocurrency platform, Haru Invest, has also suffered serious financial consequences. The South Korean company, which promised high returns on cryptocurrency deposits, was declared bankrupt after a $1 billion fraud was exposed.
When the platform halted withdrawals in June 2023, more than 16,000 investors were affected. Haru Invest’s directors, including CEO Hugo Hyungsoo Lee, were arrested in connection with the fraud, and the company is now poised to liquidate its assets in hopes of recovering some of the funds for its creditors.
