Bankrupt crypto lending firm Celsius will distribute an additional $127 million to creditors “soon,” according to a Nov. 28 post from its estate. The distribution is being made available from the “Litigation Recovery Account,” the post said, and it will be paid out to creditors of classes 2, 5, 7, 8 and 9.
Source: Celsius.
According to a Nov. 27 Notice of Commencement filed in the United States Bankruptcy Court for the Southern District of New York, these classes include retail borrower depositors and users of the Earn program, as well as creditors with withhold, unsecured loan or general unsecured claims. It does not include users who have convenience claims or who are not entitled to illiquid recovery rights.
Creditors will receive crypto payment through the same method they used for the first distribution: PayPal, Venmo or Coinbase. If they don’t have a verified account with these, they will receive a cash payment. Some corporate creditors will be able to receive the payment as well, but those with convenience claims will be excluded.
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Despite the seemingly good news of a second payment, some crypto users on X complained that the payment was too little, too late. “You guys stole me 0,7 BTC and a bunch other tokens! Give it back to me!” exclaimed Bitcoin investor Puffel. “I lost here my 8 btcs.... Today I could be a millionaire .... thiefs…” Bitcoin investor JCH said, adding in a second post that he had received “peanuts.”
Source: JCH.
In March, some Celsius corporate creditors claimed that they were getting 30% reduced payments due to the debtors’ estate relying solely on Coinbase to process distributions.
Celsius went bankrupt in July 2022. The company’s former CEO, Alex Mashinsky, was arrested and charged with fraud in July 2023 for allegedly lying to depositors about the risks of investing in the platform. His trial is scheduled to begin in January 2025.
Related: Judge denies ex-Celsius CEO’s bid to dismiss fraud, manipulation charges