Celsius Network Set to Reimburse Customers and End Bankruptcy

  • Celsius Network is about to secure settlements to end bankruptcy.
  • The Network has struck two settlements that would allow the recovery of customers’ property.
  • Judge Martin Glenn will review Celsius’ settlement hearing on August 10.

Celsius Network, the defunct crypto lender, is about to secure settlements that would enable it to end the burden of bankruptcy upon its shoulders. According to reports, the collapsed crypto lending platform has struck two settlements that would allow the recovery of customers’ property.

Judge Martin Glenn, a United States Bankruptcy Judge for the Southern District of New York, will review Celsius’ settlement hearing on August 10. The proposed settlements would cover unsecured claims by Celsius customers worth $78.2 billion. The agreement includes an exercise that increases customers’ reimbursements by 5%. That would reportedly satisfy claims regarding allegations of fraud and misrepresentation by Celsius management.

Participating in the proposed settlement exercise would not stop Celsius Network account holders from filing independent claims against Celsius. Any customer wishing to do so will still be able to continue with the process.

According to reports, customers with funds in the Celsius Earn program that bears interest would be entitled to a solution via the second installment. The case will be different for customers who borrowed cryptocurrency funds. Those will be eligible for compensation through the new company after the bankruptcy procedure. They would also receive a percentage of their funds in crypto assets under the proposed agreement.

The Celsius bankruptcy case generated varying complexities for customers at different levels. John E. Deaton, a renowned crypto lawyer, noted that Celsius’ customers who loaned their XRP tokens to the network suffered a more complex case. According to Deaton, this category of customers suffered losses that Ripple and other XRP holders did not. He explained that the Celsius bankruptcy destroys any claim of horizontal commonality under existing law in the 2nd Circuit.

Celsius Network filed for bankruptcy in July 2020 after the collapse of the Terra ecosystem due to market instability. The company’s former CEO, Alex Mashinsky, was arrested and detained over charges of fraud and criminal intentions to manipulate the market.

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