Bankrupt Crypto Lender Celsius Repays $2.5 Billion to Creditors, Reimbursing 93% of Eligible Claims

Celsius has distributed $2.53 billion to over 251,000 creditors since January 2024, reimbursing around 93% of the eligible money owed. Despite the progress, 121,000 creditors, mostly owed smaller amounts, have not yet claimed their distributions.

Bankrupt cryptocurrency lender Celsius has made significant strides in repaying its creditors, distributing approximately $2.53 billion to over 251,000 claimants since the repayment plan was initiated in January 2024. This marks a major milestone, with the company now having reimbursed around 93% of the eligible money owed to its creditors.

Celsius, which filed for bankruptcy in July 2022, previously offered users the opportunity to earn interest on their crypto deposits. At its peak, the company claimed to have 1.7 million users with $25 billion in assets under management and an $8 billion loan book. However, the company’s collapse left users unable to access their funds for over a year, leading to a series of prolonged legal battles.

In November 2023, a Delaware bankruptcy court approved a plan to reimburse former users, which included the creation of a new firm called NewCo. Backed by $450 million in seed funding, NewCo is set to focus on Bitcoin mining and staking, providing a fresh start for Celsius’s business model. During the recent distribution process, Celsius’s debtors received cash and cryptocurrency for their losses, while some also received common stock in NewCo, which is now listed on the Nasdaq stock exchange. The prices of the cryptocurrency owed were calculated based on values as of January 16, 2024.

Despite the substantial progress, the distribution process has been far from smooth. Approximately 121,000 creditors have not yet successfully claimed their proportion of the distribution, many of whom are former users generally owed smaller amounts. Of these, around 64,000 creditors have yet to claim distributions of less than $100, while 41,000 are entitled to distributions between $100 and $1,000. The court has noted that these smaller creditors “may not be incentivized to take the steps needed to successfully claim a distribution.”

The distribution process, described by the court as “likely the most complicated and ambitious distribution process ever attempted in a Chapter 11 case,” has faced several challenges. Issues have included creditors not reading emails or redeeming claim codes sent for distribution via PayPal, as well as difficulties in passing KYC/AML checks required for opening accounts with PayPal or Coinbase.

Meanwhile, the legal complexity surrounding Celsius continues to evolve. On August 9, the company filed a lawsuit claiming that $2.4 billion in Bitcoin was improperly liquidated by stablecoin firm Tether before its bankruptcy in July 2022. As Celsius moves forward with its repayment plan, the outcome of this latest legal battle remains to be seen.

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