Bankrupt crypto lending platform Celsius recently filed its intent to claw back a number of pre-bankruptcy withdrawal requests.
The struggling cryptocurrency lender formally submitted an intent to claw back certain funds from clients that withdrew $100,000 or more during the 3 months prior to Celsius declaring bankruptcy.
Creditors of the bankrupt lender had withdrawn large amounts from the platform prior to the firm filing bankruptcy. Now, these creditors might have to return a portion of those funds or potentially face legal actions/consequences.
On January 9, 2023, Celsius’ bankruptcy administrators submitted an intent to inform company creditors that account holders who withdrew $100,000+ in the 90 days prior to the date the firm filed bankruptcy (on July 13, 2022) could have to return the money.
The filing further noted that account holders with withdrawal “preference exposure” of more than $100,000 who are not considered to be excluded entities/parties, had not voted to deny or reject the reorganization plan and had not opted out of releases may settle their outstanding liability by paying 27.5% of the funds by the end of this month.
Those who are interested in settling could turn in an election form by January 25, 2024, while noting their plans to complete the settlement payment. Clients that choose to settle should get a release of applicable avoidance actions and distributions under the reorganization plan, the company confirmed.
Clients who don’t settle by the established deadline will then have their withdrawal preference exposure taken care of by appointed administrators and could potentially get sued in an attempt recover the preferences they had obtained.
The filing also mentioned that any Withdrawal Preference Exposure that is not settled by January 31, 2024, is to be be “addressed by the Litigation Administrator after the Effective Date through separate correspondence or other action.”
During November of last year, Celsius administrators had granted eligible participants access to withdraw a portion of their crypto holdings. Celsius has also been focused on unstaking and withdrawing Ethereum so that it can be ready for “timely distributions” to creditors.
Reports from Nansen claim that it presently makes up around 20% of the withdrawal queue, with just over 112,000 ETH, valued at more than $270 million at the time of writing.
In November of last year, the company had also announced a more conservative post-bankruptcy business plan that would prioritize Bitcoin mining activities. This decision had been formally approved by the judge assigned to the bankruptcy proceedings at the time.