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Crypto Reporter
Shalini Nagarajan
Crypto Reporter
Shalini Nagarajan
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Defunct crypto lender Celsius on Tuesday filed a notice of appeal challenging a judge’s order that denied its claims for damages from FTX, as part of its ongoing bankruptcy proceedings.
Since early 2024, the lender has sought to recover $2b from FTX for damages. It initially cited “unsubstantiated and disparaging statements” by FTX officers, claiming these hastened its collapse. Later, Celsius revised the claim to focus on “preferential transfers,” arguing these favored certain creditors. The adjusted claim later stood at $444m.
In December, Judge John Dorsey dismissed both claims. He ruled that Celsius’s original proof of claim only briefly mentioned a potential preferential transfer investigation, which was not enough to validate the preferential claim.
The court also ruled that the firm’s amended claims, filed in July 2024, were improper. Celsius had not sought permission to amend, the amendments were insufficiently linked to the original claims, the company offered no reason for the filing delay and the changes would disrupt FTX’s reorganization efforts.
Celsius Completes Massive Payouts; Founder Pleads Guilty to Fraud Charges
Last August, Celsius distributed over $2.53b to about 251,000 creditors. This payout covered nearly two-thirds of eligible creditors and 93% of the total claim value. The administrator issued the funds in crypto and cash, based on Jan. 16 prices.
By November, Celsius announced an additional $127m payout to creditors, covering around 60% of their claims.
Last month, founder Alex Mashinsky pleaded guilty to commodities fraud and price manipulation of the Celsius token. The most serious charge carries a potential 20-year prison sentence. His sentencing is set for April 8, 2025.
