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Celsius seeks to claw back $2B in customer withdrawals: Report

News Feed - 2024-03-21 01:03:55

Zhiyuan Sun7 hours agoCelsius seeks to claw back $2B in customer withdrawals: ReportThe move would allegedly serve as an equity remedy to repay customers who did not withdraw their funds in time before Celsius’ collapse.1028 Total views2 Total sharesListen to article 0:00NewsOwn this piece of crypto historyCollect this article as NFTJoin us on social networksBankrupt crypto lender Celsius seeks to claw back $2 billion from major customers who withdrew from the platform shortly before its bankruptcy in July 2022.


According to a March 20 Bloomberg report, a Celsius bankruptcy oversight committee has begun contacting customers who withdrew more than $100,000 prior to its collapse, with the goal of using potential returned funds to pay back customers who did not withdraw from the platform in time. As stated by trustees, the clawback is expected to affect 2% of Celsius customers who collectively withdrew 40% of the firm’s assets at the eleventh hour before its bankruptcy filing.


The committee will offer clawback-affected customers a “favorable rate” if they decide to settle, with the threat of litigation if funds are not returned. In addition, customers who settle will have their notional digital assets adjusted based on their July 2022 value, near the nadir of the crypto bear market, allowing them to keep whatever capital appreciation resultant from the market recovery.


On Jan. 31, Celsius exited bankruptcy and began the redistribution of more than $3 billion in crypto and fiat money to users, which was agreed upon by 98% of creditors. However, some business creditors have since alleged that their fiat money payouts would reduce their claims by 30% compared to being paid in crypto. 


The firm also settled $4.7 billion in fines with the United States Federal Trade Commission alongside settlements with the Department of Justice, the Securities and Exchange Commission, and the Commodity Futures Trading Commission. Its CEO, Alex Mashinsky, resigned in September 2022. In July 2023, he was indicted on seven felony counts, including securities fraud, wire fraud and conspiracy to commit fraud related to his activities at the platform. He is free on a $40 million bail at the time of publication. 


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