Celsius, the platform whose bankruptcy plan was finally approved late last year, recently went after former customers who withdrew their funds before the company had a chance to freeze their funds.
The former cryptocurrency staking, lending and trading platform, which has since focused on Bitcoin mining after the judge approved its bankruptcy case, was the first mover cryptocurrency major to raise “unsecured creditors” argument in court. to appropriate customer funds.
It is therefore not surprising that another scandalous bankruptcy proposal also comes from Celsius.
According to a notice submitted by Kirkland & Ellis on behalf of their client, Celsius users who withdrew more than $100,000 from the platform in the 90 days before the former giant declared bankruptcy must “resolve their unpaid liability” or face to a dispute.
K&E attorneys have called the act of withdrawing funds before bankruptcy “avoidance actions,” which can be pursued in court. According to the document, these creditors must return 27.5% of what they withdrew before January 31 or face clawback.
“If you are an account holder who has not agreed to the custody settlement or do not have a Class 6A general custody claim, this is the amount you must pay to settle your total exposure to opt-out preferences. This amount represents 27.5% of your total withdrawal preference exposure. (…) I intend to make the WPE settlement payment before the deadline of January 31, 2024. I understand that I need to make the WPE settlement in cash via bank transfer.
Repayments to creditors will begin soon
The notice issued by Celsius’ legal team is part of preparations to repay creditors in accordance with the terms set out in the restructuring agreement. Apparently, these measures will allow those who withdrew a significant amount but still had assets blocked on the platform to receive a portion of the funds that were to be distributed.
“After submitting the election form and making the WPE settlement payment, you will receive confirmation of the Debtors’ receipt of your WPE settlement payment, that you have completed all required actions in connection with the WPE settlement action. account holder’s avoidance and you will have been released from all avoidance actions.
Although recovery attempts have been made with varying degrees of success by FTX and others, the move to recoup funds from private investors is unprecedented and could be hotly challenged in court. It should be noted that the above paragraph is dependent on the recipient signing the notice of their agreement to the duration, and that the applicability of the clawback may not be possible.
However, if this decision is successful, other bankrupt platforms will certainly take note and file their own petitions.
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