Creditors of the bankrupt crypto lender Celsius that withdrew large sums from the platform before it declared bankruptcy may be required to return part of those funds or face legal action.
On Jan. 9, Celsius bankruptcy administrators filed an intent to notify its creditors that account holders who withdrew more than $100,000 in the 90 days before the date the company declared bankruptcy on July 13, 2022, may be required to return them.
The filing stated that account holders with “withdrawal preference exposure” over $100,000 who are not excluded parties, did not vote to reject the reorganization plan, and did not opt out of releases can settle their liability by paying 27.5% of the funds by Jan. 31, 2024.
Those wanting to settle should submit an election form by Jan. 25 indicating their intent to make the settlement payment.
Account holders who settle will receive a release of all avoidance actions and distributions under the reorganization plan, it stated.
Those who do not settle by the deadline will have their withdrawal preference exposure addressed by administrators and may be sued to recover the preferences they received.
“Any Withdrawal Preference Exposure that is not settled by January 31, 2024, will be addressed by the Litigation Administrator after the Effective Date through separate correspondence or other action,” the filing stated.
In late November 2023, Celsius administrators granted eligible participants access to withdraw some of their cryptocurrency holdings.
Related: Crypto lender Celsius to unstake $470M in Ether ahead of repayments
Celsius has been actively unstaking and withdrawing Ethereum in preparation for “timely distributions to creditors.” According to Nansen, it currently comprises 20.3% of the withdrawal queue, with 112,037 Ether (ETH) valued at approximately $266 million.
In November 2023, the firm announced a scaled-back post-bankruptcy strategy focusing on Bitcoin mining, which was approved by the judge presiding over the bankruptcy proceedings at the end of December.
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