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In a significant development, Celsius, the cryptocurrency lending platform that filed for bankruptcy in July 2022, has begun opening withdrawals for some of its users. This move marks a pivotal moment for the company and its customers following financial uncertainty and legal complications.
Celsius Sets February Deadline for Withdrawals
Customers enrolled in the Custody Program, classified under “Class 6A General Custody Claims” and “Class 6B Withdrawable Custody Claims,” can now withdraw their funds. The platform has set a deadline of February 28 for these transactions.
Those who qualify can withdraw 72.5% of their cryptocurrency holdings, although transaction fees will reduce this amount. It’s important to note that this opportunity is unavailable to customers who voted against the reorganization plan. For these individuals, their assets will be separately managed by a Litigation Administrator for six months.
Celsius has faced some technical challenges during this process. Reports indicate that several users have experienced difficulties while attempting to log in for withdrawals, though the extent of these issues is not fully quantified.
Legal Battles Continue for Celsius CEO
The journey to this point has been fraught with challenges for Celsius. After filing for bankruptcy last summer, the platform faced numerous legal hurdles. In March, a settlement plan was approved, promising deposit account holders 72.5% of their funds in two installments over 2023. In a subsequent development, the company’s reorganization plan received creditor approval in September, allowing for the distribution of approximately $2 billion in bitcoin and ether. The company’s equity is set to be transferred to NewCo, under the management of the Fahrenheit consortium.
Celsius has been navigating bankruptcy proceedings and legal actions from various regulatory bodies. The company and its CEO, Alex Mashinsky, were sued by the SEC, FTC, and CFTC, primarily over allegations of misleading customers. While Celsius settled with the FTC for $4.7 billion, Mashinsky faces a criminal trial scheduled for the next fall.
The current distribution process impacts around 58,300 users, who collectively hold custody assets worth about $210 million, per a September court document. This step is crucial for Celsius to regain trust and stabilize its operations. The company’s shift towards crypto mining and staking, under the new management of Fahrenheit, signals a strategic pivot aimed at long-term viability.
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