A bankruptcy judge overseeing the bankruptcy case for crypto lending platform Celsius Network has approved a settlement plan allowing custody account holders to get back 72.5% of their crypto holdings.
In a March 21 hearing, United States Bankruptcy Judge Martin Glenn signed off on an agreement allowing Celsius custody account holders the right to receive 72.5% of their crypto claims provided they approve of the settlement. Under the agreement, the claimants cannot “pursue any litigation, including seeking relief from the automatic stay, turnover, or other claims or causes of action” and digital assets not part of the settlement will be controlled by the Celsius debtors.
Bankruptcy Court: The #Celsius Custody settlement is approved. Will be optional for customers. 30 days to review. Those who opt in will get 72.5% of their claim in two distributions 36.25% up front and 36.25% upon plan resolution (or at end of year).
— Cam Crews (@camcrews) March 21, 2023
The settlement between the committee of unsecured creditors, Celsius debtors, and an ad hoc group of account holders was the latest development in the lending platform’s case in U.S. Bankruptcy Court for the Southern District of New York since it filed for Chapter 11 in July. The defunct platform announced in February that NovaWulf Digital Management would act as a sponsor for its restructuring plan, in which it was suggested that more than 85% of Celsius customers would recover roughly 70% of their crypto.
Judge Glenn ruled in January that more than $4 billion in funds from Celsius’ interest-bearing Earn program belonged to the lending platform. However, a December ruling ordered roughly $44 million in crypto to be returned to Celsius customers, and a February decision from the judge authorized Celsius debtors to sell $7.4 million worth of Bitmain coupons if needed.
Bankruptcy proceedings for major crypto firms amid the 2022 market crash are ongoing across courts in the United States, now the backdrop for failures of Signature, Silicon Valley and Silvergate ban. On March 17, the debtors in crypto exchange FTX’s bankruptcy case reported a roughly $7 billion shortfall between scheduled assets and claims.