Celsius Network, the once-prominent cryptocurrency lending platform, has made significant progress in its bankruptcy proceedings. As part of its Chapter 11 case, the company’s bankruptcy administrator has distributed over $2.53 billion to approximately 251,000 creditors. This development marks a crucial step in resolving one of the most high-profile collapses in the crypto industry.
Background on Celsius’ Bankruptcy
Celsius filed for bankruptcy in July 2022, after suspending customer withdrawals due to financial difficulties exacerbated by a steep decline in the value of its native token, CEL. The bankruptcy court approved a reorganization plan in November 2023, which involved the distribution of over $3 billion to roughly 375,000 creditors from over 165 countries.
The Distribution Process
The recent $2.53 billion distribution covers around two-thirds of all eligible creditors and represents approximately 93% of the value owed. The payouts were made in liquid cryptocurrency and cash, with asset valuations based on prices as of January 16, 2024. Despite these substantial payments, 121,000 creditors, each with an average claim of $1,500, have yet to receive their payouts due to various challenges in the distribution process.
Challenges Ahead
The complexity of this bankruptcy case has made it one of the most intricate distribution processes ever attempted in a Chapter 11 case. Regulatory non-compliance before bankruptcy and ongoing enforcement actions have added to the challenges faced by the Celsius administrator. Moreover, a significant portion of unclaimed distributions is relatively small, with some creditors owed less than $100, leading to a lack of incentive for these creditors to complete the necessary steps to claim their funds.
Conclusion
Celsius’ bankruptcy saga continues to unfold, but the recent distributions signify a major step towards resolution. With around $3 billion being allocated to creditors, the restructuring of Celsius and the creation of MiningCo, a new entity emerging from the ashes of the platform, mark the end of a turbulent chapter in the crypto industry.
