Celsius, the troubled cryptocurrency lender, has initiated legal proceedings to reclaim funds from creditors who withdrew amounts exceeding $100,000 within the three months leading up to its declaration of bankruptcy.
The filing by Celsius bankruptcy administrators on January 9 informs creditors that those who withdrew substantial sums during the 90 days preceding the company’s bankruptcy declaration on July 13, 2022, may be obligated to return a portion of those funds.
The document specifies that account holders with “withdrawal preference exposure” over $100,000, who meet certain criteria such as not being excluded parties, not voting against the reorganization plan, and not opting out of releases, have the option to settle their liability by remitting 27.5% of the withdrawn funds by January 31, 2024.
Celsius Settlement Process And Warning On Unresolved Exposure
To proceed with the settlement, individuals must submit an election form by January 25, expressing their intent to make the payment.Failure to settle by the stipulated deadline will result in administrators addressing the withdrawal preference exposure, potentially leading to legal action to recover the preferences received by the concerned parties.
The filing warns that any unresolved Withdrawal Preference Exposure by January 31, 2024, will be handled by the Litigation Administrator after the Effective Date through separate communication or other actions.
In a development in late November 2023, Celsius administrators permitted eligible participants to withdraw a portion of their cryptocurrency holdings. The company has been actively liquidating and withdrawing Ethereum in anticipation of making timely distributions to creditors. Currently, Ethereum accounts for 20.3% of the withdrawal queue, totaling 112,037 Ether valued at approximately $266 million, according to Nansen.
In November 2023, Celsius announced a revised post-bankruptcy strategy focused on Bitcoin mining, which received approval from the presiding judge overseeing the bankruptcy proceedings at the end of December.