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HomeNewsCelsius Unlocks Withdrawals for Eligible Crypto Holders Amid Bankruptcy Proceedings

Celsius Unlocks Withdrawals for Eligible Crypto Holders Amid Bankruptcy Proceedings

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  • Celsius, the cryptocurrency lending platform, now permits eligible users to withdraw 72.5% of their holdings, aligning with its bankruptcy restructuring plan.
  • Customers opposing the reorganization plan will have their assets managed by a litigation administrator, separate from the ongoing proceedings.

In a significant development for its clients amidst financial turmoil and legal entanglements, bankrupt cryptocurrency lending platform Celsius has initiated the withdrawal process for select users. This move comes as a part of the company’s restructuring strategy, following its bankruptcy filing in July 2022.

Navigating Through Bankruptcy: A Path to Partial Recovery

Under the conditions outlined in a filing with the United States Bankruptcy Court for the Southern District of New York, participants categorized under

“Class 6A General Custody Claims”

and

“Class 6B Withdrawable Custody Claims”

in Celsius’s custody program are now eligible to reclaim a portion of their funds. These users have until February 28, 2024, to withdraw 72.5% of their cryptocurrency holdings, after accounting for transaction fees. However, customers who have objected to the reorganization plan are excluded from this withdrawal process. For them, a litigation administrator will independently handle their assets for a six-month period.

The Road to Restructuring and Legal Hurdles

Celsius’s journey through bankruptcy has been fraught with legal challenges and regulatory scrutiny. Following the endorsement of a settlement plan in March, the platform pledged to return 72.5% of deposited funds to account holders in two installments throughout 2023. This plan was a crucial step in addressing the financial instability that led to the company’s bankruptcy.

In a subsequent update, the company’s reorganization plan, which included the distribution of around $2 billion in Bitcoin and Ether, was approved by creditors in September. As part of the restructuring, the company’s equity will be transferred to a new entity, NewCo, managed by the Fahrenheit consortium. Unlike Celsius’s previous focus on staking, the primary operation of NewCo, as announced on November 20, will center around Bitcoin mining.

Legal Battles and Future Prospects

The path forward for Celsius is marred by ongoing legal battles with multiple regulatory entities, including the U.S. Securities and Exchange Commission, the Federal Trade Commission (FTC), and the Commodity Futures Trading Commission. These legal actions primarily revolve around allegations of customer deception. While a settlement of $4.7 billion with the FTC has been reached, the company’s CEO, Alex Mashinsky, faces a criminal trial, adding another layer of complexity to Celsius’s efforts to navigate its financial and legal challenges.

As Celsius maneuvers through these bankruptcy proceedings and legal obstacles, this development of allowing partial withdrawals marks a critical juncture in its efforts to restructure and address the concerns of its stakeholders.

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Godfrey Benjamin
Godfrey Benjamin
Godfrey Benjamin is an experienced crypto journalist whose primary goal is to educate everyone about the prospects of Web 3.0. His love for crypto was sparked during his time as a former banker when he recognized the clear advantages of decentralized money over traditional payments. Business Email: info@ethnews.com Phone: +49 160 92211628
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