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Bankrupt cryptocurrency lender Celsius and its Series B holders agreed to the distribution of $25 million from the sale of cryptocurrency custodian GK8. According to a filing made late on Monday, $24 million of the settlement will be used to pay for legal fees, and the remaining $1 million will be divided among the Series B holders.
During Celsius’ bankruptcy proceedings, the self-custody platform GK8 was sold to Galaxy Digital. Although the specifics of the transaction were not made public, sources had previously indicated that the price was much lower than the $115 million Celsius had paid for it.
Disputes Over Settlements
The settlement was reached despite significant disagreement regarding the suggested distribution of monies. The majority of Series B shareholders are currently pleading with the court to accept the settlement and continue the bankruptcy procedure.
A mutual desire to avoid expensive litigation, a controversial and drawn-out confirmation procedure, and a concomitant rise in professional expenses gave rise to the Settlement Agreement, the filing said. The proposed allocation is a material aspect of the agreement reached between the Debtors, the Committee, and the Initial Consenting Series B Preferred Holders, which accord was meticulously negotiated and is eminently reasonable, it added.
In November 2021, the bankrupt cryptocurrency lender completed its Series B investment. The oversubscribed round was spearheaded by the growth equity company Westcap and one of Quebec’s pension funds, increasing the amount from $400 million to $750 million.
Looking Forward To The Court
The filing concluded by saying that the Settlement provides the Debtors and all parties with precious confidence about the future in addition to unlocking significant value for the Debtors’ creditors. Therefore, it stated that the Motion should be granted, and the Court should overturn the objections.
The SEC sued Celsius and its former CEO Alex Mashinsky last week, alleging that they raised billions through illegal and fraudulent sales of “crypto-asset securities,” misled investors about the company’s financial situation, and artificially inflated the price of the native Celsius token.
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