Celsius Reimburses 93% of Creditors, Distributes $2.53 Billion Amid Complex Chapter 11 Process

Bankrupt crypto lender Celsius has reimbursed about two-thirds of its creditors. That’s roughly 93% of the money owed. A recent court filing shows they’ve distributed $2.53 billion to over 251,000 creditors since the repayment plan started in January 2024.

Celsius declared bankruptcy in July 2022. At that time, they allowed users to earn interest on their crypto deposits. They once claimed to have 1.7 million users and managed $25 billion in assets, with an $8 billion loan portfolio. After a long legal battle that kept users from accessing their crypto for more than a year, a reimbursement plan got the green light in November 2023.

The Delaware bankruptcy court approved a plan to create a new company called NewCo, backed by $450 million in seed funding. The restructuring team stated that NewCo will focus on Bitcoin mining and staking.

In the recent distribution, creditors received cash and crypto for their losses. Some users even got common stock in NewCo, which is now listed on the Nasdaq stock exchange. The values for the cryptocurrency owed were based on prices from January 16, 2024.

However, about 121,000 creditors haven’t yet claimed their share of the distribution. These are mostly former users who are owed smaller amounts. The filing revealed that around 64,000 creditors have not claimed distributions of less than $100. Additionally, 41,000 creditors are entitled to distributions between $100 and $1,000. The court pointed out that these smaller creditors “may not be incentivized to take the steps needed to successfully claim a distribution.”

Even with the 93% reimbursement figure, the distribution process hasn’t been easy. The filing described it as potentially the most complex distribution ever attempted in a Chapter 11 case. Various factors have complicated this process. For instance, some creditors didn’t read emails or redeem claim codes sent for distribution via PayPal. Others failed to pass KYC/AML checks required for accounts with PayPal or Coinbase.

While progress has been made, the legal disputes surrounding Celsius are still unfolding. On August 9, Celsius filed a lawsuit claiming that $2.4 billion in Bitcoin was improperly liquidated by Tether before its bankruptcy in July 2022. Tether has called the lawsuit a “shakedown” in its response.