According to a Bloomberg report, Celsius Network, the cryptographic platform which filed for bankruptcy in July 2022, requires major customers who collectively withdrew more than $2 billion prior to bankruptcy to return those funds to avoid potential litigation.
An oversight committee formed during Celsius’ Chapter 11 case began contacting customers who withdrew more than $100,000 during the period leading up to the company’s bankruptcy filing. This recovery effort aims to repay creditors who didn’t give up Celsius backgrounds.
Settlement offered to Celsius users
According to reportThe oversight committee’s recovery process will impact approximately 2% of Celsius users who, in total, withdrew approximately 40% of the platform’s assets in the 90 days prior to the Chapter 11 filing.
Celsius reported $6 billion in assets, 1.7 million registered users, and 300,000 active users with account balances greater than $100 at the time of the bankruptcy.
Notably, the oversight committee has offered clients who may face recovery proceedings a settlement option, providing them with a “favorable rate” if they decide to settle.
Customers opting for settlement would have their potential liabilities determined based on the value of their assets at the time of 2022 withdrawals. This means that liquidating clients would retain any appreciation in the value of their digital assets resulting from the increase in cryptocurrency prices over the past year.
Legal consequences if the settlement offer is refused
According to Bloomberg, customers who refuse to settle could be subject to significantly greater liability through potential litigation. The committee’s letter warns customers of the possible consequences of not accepting the settlement offer.
In November, a bankruptcy judge approved Celsius’ plan to distribute billions of dollars in assets and turn them into a lender-owned Bitcoin mining company. According to a court filing filed by the company’s lawyers, Celsius has already distributed around $2 billion in assets.
Overall, Celsius Network’s oversight committee is seeking to recover more than $2 billion in withdrawals made by large clients shortly before the company filed for compensation. bankruptcy. By offering settlement options based on the value of assets at the time of withdrawal, Celsius aims to alleviate potential litigation and expedite repayment to creditors.
As the process unfolds, affected customers decide to settle potential liabilities or face potential litigation with potentially greater consequences.
Currently, the network’s native token, CEL, is trading at $0.1862, reflecting a significant year-to-date decline of over 49%.
On shorter time frames, the token has seen a 12% drop in the last 24 hours, a 32% drop in the last week, and a 27% drop in the last fourteen days, highlighting the limited interest and lack of confidence among investors in the CEL token.
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