Celsius Network, now bankrupt, is suing account holders who withdrew large sums before the company declared bankruptcy, wanting to recover funds to benefit another creditors.
„You think you withdrew your money just in time? We have bad news for ya!”
The lawsuits were filed in the US Bankruptcy Court for the Southern District of New York, and they target account holders with over $100,000 in Withdrawal Preference Exposure, WPE.
Celsius Network’s litigation administrator is pursuing those who made substantial withdrawals in the 90 days before the company filed for bankruptcy.
This legal action follows successful settlements with over 1,500 account holders, recovering nearly $100 million and addressing more than $500 million in preference liabilities.
Mohsin Meghji, the Celsius Litigation Administrator, stated that account holders who withdrew funds just before Celsius went bankrupt unfairly benefited at the expense of others.
He explained that these individuals had the chance to settle at favorable rates but chose not to, and now the company seeks to reclaim the full value of those withdrawals as required by the Bankruptcy Code.
„We f*cked up. You pay.”
The withdrawals made from April 14, 2022, to July 13, 2022, allegedly created a financial imbalance that contributed to Celsius’s bankruptcy.
In reality, this sounds like calling names, because we know probably Mashinsky and the Celsius leadership caused the bankruptcy, as they were the decision makers.
The company’s financial problems eventually led to its collapse, and now Celsius wants to recover these funds to distribute them among other creditors who didn’t withdraw their assets, who trusted the company. They want to rekt everyone equally.
Former Celsius CEO Alex Mashinsky and other executives face charges of fraud and market manipulation, which played a central role in the company’s downfall.
After making a reorganization plan approved by creditors, Celsius emerged from bankruptcy earlier this year.
This plan’s goal is to return up to 85% of holdings to creditors. The funds recovered through ongoing litigation are meant to support this goal, aligning with the reorganization plan.
Everyone must suck the same
The reorganization plan includes provisions for creditors with funds in Celsius’ interest-bearing Earn program, allowing them to receive a portion of their assets in cryptocurrency and shares of the new company.
The aggressive legal action has drawn criticism, with some viewing it as unfair and likening it to theft.
Critics argue that this move undermines the property rights of users, painting a pretty negative picture of third-party service providers and custodians.
