Celsius Network has achieved settlements with claimants and borrowers that could allow the embattled crypto lender to proceed with plans to return funds to customers, according to court filings.
Celsius CEO Alex Mashinsky was arrested earlier this month on fraud charges, casting further doubt on the prospects for recovery by account holders. However, the settlements reached this week could help Celsius move towards exiting bankruptcy and distributing remaining crypto assets, as reported by Cryptopolitan.
One settlement resolves claims by some 30,000 customers alleging fraud and misrepresentation, increasing potential payouts by 5%. This settlement covers around $78 billion in compensation sought by claimants.
Another settlement resolves disagreements between depositors with high-interest accounts and borrowers who took out crypto-backed loans from Celsius. The borrowers group had argued for preferential treatment. Under the settlement, borrowers will be able to reclaimcrypto used as collateral after repaying loans.
As part of its restructuring plan, Celsius proposes repaying customers with a portion of their original crypto deposits and equity in a new entity overseeing Celsius’s bitcoin mining operations and other less liquid assets.
A confirmation hearing is scheduled for October, and customers could see disbursements by the end of the year if the bankruptcy judge approves Celsius’s plan. However, many details still remain unclear, including how much crypto depositors might ultimately recover.
Celsius’s legal team has maintained that customers were entitled only to repayment of their initial deposits. But many customers argued they were owed damages, citing alleged misconduct by former Celsius management. Mashinsky’s arrest adds another complication to the bankruptcy proceedings.
These settlements represent important progress in resolving one of the largest crypto collapses, although many uncertainties remain,” said Justin Wales, CEO of blockchain analysis firm Chainalysis. “Customers will hope a significant portion of their original deposits can ultimately be returned.”
Celsius did not respond to a request for comment regarding details of the settlement agreements and plans for asset distributions. The crypto lender filed for bankruptcy in July, freezing withdrawals and leaving depositors unable to access funds.