Will Clients Of Bankrupt Celsius Platform Get Their Funds Back?

Now bankrupt crypto lender Celsius, which managed assets worth around $12 billion earlier in the year, was forced into bankruptcy in July after crypto prices spiraled down, thus causing an industrywide liquidity shortage. However, the story doesn’t end there, as many of Celsius’ clients got duped by the firm by falling for the wrong pretext.

Celsius Clients Duped For Millions

Thousands of loan holders are reported to have more than $812 million in collateral locked on the platform, and bankruptcy records show, even after borrowers had repaid their loans, Celsius failed to return collateral to them.

Knitowski, who runs the Texas-based company called Phunware, said that,

“Every aspect of what they did was wrong. If my CFO or I actually did anything that looked like this, we would immediately be charged.”

Creditors are currently working their way through the bankruptcy procedure in an effort to retrieve at least some of the money that was owed to them.

After Celsius made the announcement on Friday that it was selling the asset custody platform known as GK8 to Galaxy Digital, it gave them a reason to have a degree of hope for the future.

Read More: Novogratz’s Galaxy Digital To Buy Assets From Bankrupt Celsius

Who Gets The Money?

According to David Adler, a bankruptcy lawyer at McCarter & English who represents Celsius creditors, money from the deal has to go toward paying legal fees.

David Adler is the legal representative for Celsius creditors. After that, there is a possibility that there are funds left over for previous consumers.

According to Adler, the most important question is who exactly has the right to the money that they receive from GK8. Adler has stated that he is the representative for a group of seventy-five borrowers who have around one hundred million dollars worth of digital assets on Celsius’s platform.

The Trend Continues

This theme has surfaced more than once in the cryptocurrency space, the most recent instance being the demise of FTX a month ago.

On Twitter, the founder and former CEO of the exchange, Sam Bankman-Fried, assured his followers that everything was in order with the company’s assets. Just the day after, he was looking for a rescue package in the middle of a liquidity crisis.

Read More: Here’s Where The FTX’s $8 Billion Go, SBF Discloses