Celsius, the once prominent crypto staking, lending, and exchange platform, has taken a bold stance against former clients who withdrew their funds before the company could freeze them. The company, which has now shifted its focus to Bitcoin mining following the approval of its bankruptcy plan, was the first major player in the crypto industry to bring up the “unsecured creditors” argument in court as a way to appropriate client funds.
In a recent notice submitted by Kirkland & Ellis on behalf of Celsius, it was proposed that users who withdrew more than $100,000 from the platform in the 90 days prior to the company’s bankruptcy declaration must “resolve their outstanding liability” or face litigation. The lawyers have labeled the act of withdrawing funds prior to bankruptcy as “avoidance actions,” which can be pursued in court. According to the document, these creditors must return 27.5% of what they withdrew by the 31st of January or face clawbacks.
The notice is part of the preparations to repay creditors in accordance with the terms laid out in the restructuring agreement. These measures will allow those who withdrew a significant amount but still had some assets trapped on the platform to receive some of the funds due to be distributed. After the Election Form is submitted and the WPE Settlement Payment is made, the debtor will receive confirmation of the receipt of the WPE Settlement Payment, that all actions required under the Account Holder Avoidance Action Settlement have been completed, and that they have been released from all the Avoidance Actions.
While clawback attempts have been made with varying degrees of success by other companies, the initiative to recoup funds from private investors is unprecedented and may be hotly contested in court. The enforceability of the clawback may be impossible, contingent on the recipient of the notice signing their agreement to the term. However, if the move is successful, other bankrupt platforms will almost certainly take heed and file their own motions.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | Global |
| Countries | |
| Sentiment | negative |
| Relevance Score | 1 |
| People | None |
| Companies | FTX, Kirkland & Ellis, Celsius, Binance Futures |
| Currencies | Bitcoin |
| Securities | None |
